Asia stocks wobble as trade fears overshadow Huawei reprieve

Asian stocks were on shaky ground on Wednesday, as earlier relief over Washington`s temporary relaxation of curbs against China`s Huawei Technologies failed to offset deeper worries about trade frictions between the world`s two largest economies. MSCI`s broadest index of Asia-Pacific shares outside Japan initially edged up following gains on Wall Street but was last down 0.15%.

Australian stocks slipped 0.25%, South Korea`s KOSPI fell 0.45% and Japan`s Nikkei edged up 0.05%. "Some in the markets will continue to cling on to hopes of the United States and China reaching an agreement at the upcoming G20 meeting," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management. "But the ongoing trade conflict looks to be a protracted one, and its potentially negative impact on various economies is becoming a running concern."

The U.S. Commerce Department on Monday granted Huawei Technologies Co Ltd a license to buy U.S. goods until Aug. 19, a move intended to give telecom operators that rely on Huawei time to make other arrangements. The United States blocked Huawei from buying U.S. goods last week, a major escalation in the trade war against China, saying the firm was involved in activities contrary to national security.

Shares of technology companies helped lift Wall Street on Tuesday after Washington`s easing of curbs on Huawei. Chipmakers, many of which sell to Huawei, had been hit at the start of the week.  Leaders from G20 nations are scheduled to gather for a summit in Japan at the end of June. The dollar traded at 110.580 yen after popping up to a two-week high of 110.675 against the safe-haven Japanese currency as risk aversion in the broader markets softened.

The greenback was also supported as U.S. yields rose in the wake of gains by Wall Street shares.  The euro was little changed at $1.1165 after brushing a 2-1/2-week trough of $1.1142. The pound was steady at $1.2708. Sterling had sunk to a four-month low of $1.2685 on Tuesday on Brexit worries but bounced back after British Prime Minister Theresa May proposed a "new" Brexit deal.

The Australian dollar, sensitive to shifts in risk sentiment, slipped 0.15% to $0.6873. The currency had suffered losses the previous day when the country`s central bank governor said interest rates might be cut as soon as next month. In commodities, U.S. West Texas Intermediate (WTI) crude futures were down 0.59% at $62.76 per barrel after American Petroleum Institute data showed that U.S. crude stockpiles rose unexpectedly last week.