Renewed hopes for trade talks boosted Asian equities on Friday after China said it would not retaliate against the latest US tariffs, setting up a positive end to a volatile week.

With huge levies on hundreds-of-billions-of-dollars worth of goods due to kick in over the weekend, the long-running trade war between the world’s top two economies steps up a gear, and observers are fretting the row could drag on.

But Beijing on Thursday appeared to want to dial down the tensions, saying it would hold off on responding in kind, as it has previously warned it would do.

“The escalation of the trade war is not beneficial to China, and it is not beneficial to the United States,” commerce ministry spokesman Gao Feng said.

Later, Donald Trump said talks between the two were planned for later Thursday, though there was no indication any had taken place by early Asian trade.

The news came as a big relief for markets, which have been hit by volatility over the standoff after both sides last week unveiled fresh tariffs, with Trump slamming Beijing but days later saying they had held phone talks and negotiations would resume soon.

All three main US indexes ended with steep gains, which filtered through to Asia.

Hong Kong piled on one percent, Shanghai gained 0.6 percent, Tokyo and Sydney jumped more than one percent and Seoul rallied 1.7 percent. Singapore, Wellington and Manila each added 0.8 percent, Taipei won more than one percent and Jakarta was up 0.3 percent.

Dealers brushed off data showing the US economy grew at a slower pace than initially thought in the second quarter. Those figures were soothed by the fact that consumer spending remained strong.

“Positive news on trade has investors looking to move back into some of the equity markets and maybe a little more risk on,” Chris Gaffney, president of world markets at TIAA, told Bloomberg News.

And OANDA senior market analyst Jeffrey Halley added that while the 0.1 percentage point downward revision to the growth figure was small, “without the Chinese comments, investors would probably have continued streaming for the exit door”.

“All-in-all it emphasises once again that the US-China trade dispute… remains the only game in town for investors globally, with data a secondary player.”

The easing tensions helped China’s yuan strengthen slightly against the dollar, having fallen to an 11-year low earlier in the week.

And on oil markets both main contracts dipped after surging over the previous three days thanks to the latest developments on the trade talks as well as a plunge in US stockpiles that pointed to improving demand.

Tokyo – Nikkei 225: UP 1.2 percent at 20,701.50 (break)

Hong Kong – Hang Seng: UP 1.0 percent at 25,951.04

Shanghai – Composite: UP 0.6 percent at 2,908.42

Pound/dollar: UP at $1.2183 from $1.2182 at 2100 GMT

Euro/pound: DOWN at 90.70 pence from 90.76 pence

Euro/dollar: DOWN at $1.1050 from $1.1057

Dollar/yen: DOWN at 106.43 yen from 106.51 yen

West Texas Intermediate: DOWN six cents at $56.65 per barrel