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Asian Shares Fall Amid Trade Jitters - Asian stocks fell on Thursday morning as traders kept an eye on developments between U.S. and China amid a recent escalation in trade tensions.

The Shanghai Composite and the Shenzhen Component were down 0.4% and 1.3% respectively by 10:30 PM ET (02:30 GMT).

Hong Kong’s Hang Seng Index dropped 1.1%.

Japan’s Nikkei 225 slipped 0.6% as the Markit/Nikkei Japan Manufacturing Purchasing Managers Index fell to a seasonally adjusted 49.6 in May from a final 50.2 in the previous month.

"The re-escalation of US-China trade frictions has heightened concern among Japanese goods producers," said Joe Hayes, economist at IHS Markit, which compiles the survey.

Shares of Softbank Group Corp. (T:9984) slumped about 5% amid reports that U.S. Justice Department staff have recommended blocking a deal between T-Mobile and rival Sprint.

Down under, Australia’s ASX 200 declined 0.4%.

Hopes of a trade deal between the U.S. and China happening in the near future faded after Treasury Secretary Steven Mnuchin told CNBC in an interview that a trip to Beijing to resume trade negotiations has not been scheduled yet.

The South China Morning Post reported that recent restrictions imposed on Huawei have led China to rethink its economic relationship with the U.S.

The report came after the U.S. reportedly asked South Korea not to use Huawei products over concerns that it could be used for cyberattacks.

Meanwhile, Japan’s Panasonic Corp (T:6752) announced on Thursday that it has suspended shipments of some components to the Chinese telecom giant.

“Panasonic has instructed employees to halt transactions with Huawei and its 68 affiliates covered by the U.S. ban,” the company said in a statement.

Despite the intensifying trade tension between the U.S. and China, some analysts still believe a trade deal would be signed eventually, even if it not a “friendly deal.”

“Markets are expecting something to happen around the G-20,” Steven Englander, global head of FX research at Standard Chartered (LON:STAN), told Bloomberg in an interview. “There is still the expectation that there is going to be a deal, even if it’s not a terribly friendly deal.”

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