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Japan's Nikkei, Australia's ASX scale record peaks

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Currencies calm ahead of US CPI

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US-China trade truce extension largely priced in

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Investors await Trump-Putin summit on Friday

By Jaspreet Kalra

SINGAPORE, Aug 12 (Reuters) - Most Asian stocks rose on

Tuesday, buoyed by an extension of a tariff truce between the

world's two largest economies, while Japanese shares hit an

all-time peak, powered by tech shares after returning from a

long weekend break.

U.S. President Donald Trump extended a tariff truce with

China by another 90 days on Monday, staving off triple-digit

duties on Chinese goods, a move that was largely expected by

investors and markets.

Investor sentiment in recent weeks has been supported by

expectations of rate cuts by the U.S. Federal Reserve, resilient

U.S. corporate earnings as well as clarity on U.S. trade levies

on trading partners.

Japan's Nikkei climbed to a record high and was last

up 2% as the country's markets reopened after a public holiday

on Monday, tracking other global indices this year. Australia's

benchmark index also hit a record high, ahead of a

monetary policy meeting at which the central bank is widely

expected to cut interest rates.

That left MSCI's broadest index of Asia-Pacific shares

outside Japan a tad higher. China's blue-chip

stocks were flat while Hong Kong's Hang Seng index

eased 0.1% in early trading.

Markets have held modest ranges in recent weeks, waiting to

see whether the world's two largest economies can agree on a

durable trade deal or if global supply chains will again be

upended by the return of steep import levies.

The U.S.-China tariff truce extension "preserves the status

quo for now, so no immediate implications for investment

markets," said Shane Oliver, chief economist and head of

investment strategy at AMP in Sydney.

The U.S. and China have engaged in a tit-for-tat tariff duel

throughout the year, culminating in trade talks in Geneva,

London and Stockholm since May that focused on bringing

retaliatory tariffs down from triple-digit levels.

The latest truce extension clears the way for investors to

focus on an action-packed week dominated by U.S. inflation data,

a central bank policy decision in Australia and the first summit

between U.S. and Russian leaders since June 2021.

Traders are pricing in a 25 basis points rate cut later on

Tuesday from the RBA with another cut expected by November.

Investor attention will be on comments and forecasts from the

central bank.

"The uncertainties are around its guidance, in particular

whether it still sees further scope to cut rates and whether it

will remain gradual and measured," said AMP's Oliver.

Globally, the spotlight will be on the release of U.S.

consumer price inflation data later on Tuesday. Economists

polled by Reuters have forecast that month-on-month core CPI

edged up 0.3% in July, faster than the 0.2% in the previous

month.

"CPI will be a key test for market tone. Softer data could

give small-caps a lift, but for now, mega-caps remain firmly in

control," said Marc Velan, head of investments at Lucerne

Investment Management.

An upside surprise on inflation may also add caution to

market expectations of rate cuts by the Federal Reserve this

year.

Investors are currently pricing in at least two rate cuts

from the Fed in 2025 while J.P. Morgan expects the Fed to

deliver four successive rate cuts starting in September.

In commodities, gold prices were last at $3,354,

having dropped nearly 1.6% on Monday after Trump said tariffs

will not be placed on imported gold bars.

Oil prices were steady ahead of the August 15 meeting

between Trump and Russian President Vladimir Putin, aimed at

negotiating an end to the war in Ukraine. The talks follow

increased U.S. pressure on Russia, raising the prospect of

penalties on Moscow if a peace deal is not reached.

"The market is not pricing in significant outcomes from the

meeting, but any shift in geopolitical tone could have marginal

impact, particularly for commodities and certain emerging market

assets," said Lucerne's Velan.

Currencies were mostly calm in early trading, with the

dollar steady against major peers the euro and the yen.

Cryptocurrencies bitcoin and ether were a tad

lower after rallying in the previous session.