Asia markets inch higher ahead of trade talks; Bank of Japan keeps interest rates steady

Stocks in Asia Pacific edged up in Tuesday afternoon trade as investors await developments from U.S.-China trade talks this week in Shanghai. The Bank of Japan also opted to keep monetary policy steady.

The Nikkei 225 rose 0.32%, with shares of index heavyweight Fanuc jumping 2.93%. The Topix index added 0.24%.

Over in mainland China, the Shanghai composite added 0.65% by the afternoon, while the Shenzhen component rose 0.97% and the Shenzhen composite gained 0.886%.

Hong Kong's Hang Seng index pared losses from Monday to bounce back in early trade following yesterday's press conference, when Beijing reiterated their firm support for the city's embattled leader Carrie Lam amid protests over an extradition bill. It also suggested there will not be a change in its management of Hong Kong in the near future. The index was 0.34% up by the afternoon.

Chinese tech giant Tencent's shares rose 0.81%, with the company announcing Monday that it would cooperate with Qualcomm on gaming devices and 5G.

In South Korea, the Kospi rose 0.6% following a slump on Monday, with shares of index heavyweight Samsung Electronics jumping about 1%. Over in Australia, the S&P/ASX 200 gained 0.36%.

Overall, the MSCI Asia ex-Japan index added 0.35%.

The Bank of Japan kept monetary policy steady on Tuesday but said that it "will not hesitate to take additional easing measures" if the economy loses momentum toward achieving the target inflation rate of 2%.

The Japanese central bank also said it intends to maintain the "current extremely low levels" of short- and long-term interest rates for an extended period of time, at least through around spring 2020.

The moves came after the European Central Bank last week signaled a potential rate cut and more monetary easing ahead.

The Japanese yen last traded at 108.64 against the dollar after seeing an earlier low of 108.94.

Government data released earlier on Tuesday showed Japan's factory output falling more than expected in June.

Asia-Pacific Market Indexes Chart

Overnight stateside, the Dow Jones Industrial Average rose 28.90 points to close at 27,221.35. while the Nasdaq Composite fell 0.44% to end its trading day at 8,293.3. The S&P 500 slipped 0.16% to close at 3,020.97.

Meanwhile, U.S.-China trade negotiations are set to happen in Shanghai this week as the two economic powerhouses seek to reach a deal to end a protracted trade dispute.

Investors also await the U.S. Federal Reserve's decision on interest rates, set to be announced on Wednesday stateside. The central bank is widely expected to cut its benchmark lending rate for the first time since 2008 by 25 basis points.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.097 after rising from levels below 98.0 yesterday.

The Australian dollar changed hands at $0.6902 following declines from levels above $0.702 seen last week.

Oil prices rose in the afternoon of Asian trading hours, as international benchmark Brent crude futures added 0.49% to $64.02 per barrel and U.S. crude futures gained 0.49% to $57.15 per barrel.

Here's a look at what's coming up ahead today:

• China: First half financial statements for Huawei
• South Korea: Samsung SDI, LG Electronics earnings
• Hong Kong: Hang Lung Group, Hang Lung Properties, IMAX China earnings
• Japan: Sony, ANA Holdings, Mitsubishi Electric, SMFG, Nintendo earnings

— CNBC's Thomas Franck contributed to this report.

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