LONDON, June 25 (Reuters) - Multi-billion dollar fund

manager Franklin Templeton has started edging back into

Chinese stocks for the first time in years, betting that trade

tensions with the U.S. have now peaked and that Beijing is fully

behind its top tech firms again.

Zehrid Osmani, Head of the firm's Global Long-Term

Unconstrained team, told Reuters that a group of its funds

managing around $2 billion had only started their buying in the

last few weeks having had no exposure at all over the last 2-3

years.

"We've tip-toed (in)," Osmani said in an interview. "We

reduced our underweight which has been sizable in some of our

mandates, and in some of our global mandates we've neutralized

the China exposure."

Hong Kong-listed Chinese tech stocks are up nearly

20% this year, more than treble what the U.S. Nasdaq has

made and flow data has shown global investors significantly

increasing their buying.

Osmani said it had returned largely because after years of

spluttering growth, property market and geo-political troubles,

and a "Common Prosperity" mantra which crimped top tech firms,

China's markets look cheap.

President Xi Jinping signalled an end to the tech clampdown

by gathering the "captains of industry" earlier this year in a

show of Beijing's support, while a willingness by both China and

the U.S. to meet at the trade negotiating table was also

encouraging, Osmani said.

"We're also conscious that China, in terms of policy

initiatives, has probably more levers to pull than many other

countries in terms of fiscal and monetary policy."

"We don't think they've gone aggressive in any of those, and

we would like them to be more aggressive on both fronts to

really support the economy, but they do have those levers that

they can pull."

(Reporting by Marc Jones and Dhara Ranasinghe

Editing by Tomasz Janowski

)