Hong Kong jumped more than four percent, while Shanghai and the yuan soared as dealers seized on the news, hoping for a breakthrough in a standoff that has rocked global equities and fuelled warnings about global growth.
The gains follow a third straight advance on Wall Street as a sense of optimism returns after a diabolical October, with riskier, higher-yielding currencies enjoying a bounce against the dollar, and the pound holding on to most gains.
The day had already started with a bang after Trump tweeted that he had held positive talks with Xi, which was a rare sign of hope in the months-long stand-off between the world’s top two economies.
“Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade,” he wrote.
He added that trade talks were “moving along nicely” and meetings were “being scheduled” at the G20 summit in Buenos Aires at the end of the month.
The comment comes days after Trump warned he would impose tariffs on all China’s shipments to the US before saying he thought he could “make a great deal with China” but it was not yet ready.
Later, Bloomberg News, citing unnamed sources, reported that the president has requested key cabinet secretaries put together an outline deal to call a ceasefire in the painful row. It said several agencies had been called in to help with putting the plan together.
Hong Kong enjoyed its best percentage gain since December 2011.
The HSI and Shanghai were already buoyant after Beijing said it would introduce measures to kickstart the stuttering economy following a string of weak data, including growth at its slowest pace in nine years during the third quarter.
The yuan also rallied to 6.8966 to the dollar -- its best rate since mid-October -- having hit 6.9302 earlier in the morning and is well off the 10-year lows around 6.97 on Thursday.
The optimism spread across the region. Tokyo ended up 2.6 per cent, Singapore rose 1.3 percent and Seoul piled on 3.5 per cent, while Sydney reversed early losses to sit 0.1 percent higher.
Taipei, Bangkok, Mumbai and Jakarta also posted healthy gains.
In early trade London rose 1.1 per cent, Paris jumped 1.4 per cent and Frankfurt rallied 1.5 per cent.
“Positive comments from President Trump over US-China trade tension are cheering the market in the short term,” said Tai Hui, chief market strategist for Asia Pacific at JP Morgan Asset Management.
“Dollar moderation, the stabilising trade relationship between US and China and more stimulus from Beijing will be the key ingredients to revive market confidence in Asia.
“While we are still cautious over a full resolution of recent tensions in the medium term, resumption of dialogue between Washington and Beijing would be good enough to investors for now.” Oil prices recovered after Thursday’s plunge of more than two percent on oversupply worries, with US sanctions on Iran due within days but other major producers ready to pick up the slack.
The commodity has lost around 15 percent from four-year highs at the start of last month as Russia and OPEC said they would bolster output and dealers grew concerned about the impact on demand from a trade war between China and the US.