HONG KONG — Asian markets were mixed on Thursday but investors remain on edge over China-US trade talks and after a closely watched recession indicator hit a level not seen since just before the 2007 financial crisis.

The pound remained under pressure after British Prime Minister Boris Johnson forced an extended suspension of parliament, heightening the prospect of a no-deal Brexit and leading to speculation of a snap no-confidence vote.

Wall Street provided a healthy lead, but nervousness remains after the weekend's face-off between China and the US that saw each side impose tariffs on hundreds of billions of goods and Donald Trump label Xi Jinping at one point an "enemy".

While the US president later said top-level officials from Beijing and Washington had spoken by phone and talks would resume soon, China was reluctant to confirm this, and analysts warn the strategy is undermining market confidence.

"At each round of escalation in the US-China trade war, whether that is new retaliatory tariffs or new sanctions proposals (like cutting Chinese firms off from the US financial system), investors are growing more and more uncertain," said Hannah Anderson, global market strategist at JP Morgan Asset Management.

"There does not appear to be an off ramp to this path of continued escalation."

The row comes against a backdrop of slowing global growth and uncertainty about the Federal Reserve's plans for cutting interest rates to support the US economy.

"The catalyst that can break this market out is clearly a move, forward-looking, and a clear agreement with China to move forward and stop this escalation with the trade war," Brett Ewing, First Franklin Financial Services chief market strategist, told Bloomberg TV.

"Also, I think the market is looking for a Fed that can get ahead of these rate cuts instead of just meeting market expectations."

Asian markets started with losses across the board but some managed to claw themselves back as the day progressed.

Shanghai retreated 0.1 percent and Tokyo ended down 0.1 percent. Seoul and Wellington each lost 0.4 percent, while Mumbai shed one percent.

However, Hong Kong rose 0.3 percent after three days of selling, while Sydney, Singapore, Taipei and Manila all bounced into positive territory.

In early trade London rose 0.7 percent while Paris jumped one percent and Frankfurt climbed 0.8 percent.

Investors appear to be readying for a downturn. The yield on two-year Treasury notes has already fallen below that for 10-year bonds -- which is seen a pointer to recession -- and on Wednesday it was at its widest point since 2007.

Also, the yields on 30-year government paper touched a fresh all-time low as investors bet on longer-term economic weakness.

The shift out of riskier assets lifted the yen against the dollar, while the greenback was up against higher-yielding currencies such as the Mexican peso, South African rand, South Korean won and Malaysian ringgit.

The yuan was also under pressure, wallowing at 11-year lows, despite the central People's Bank of China setting its rate at a higher level. The unit moved within a small range either side of a point set by the bank each day.

The pound struggled to bounce back after Johnson's shock decision to bring an end to the parliamentary year and not restart it until mid-October. Sterling shed one percent initially Wednesday after the news but later pared some of the losses.

While he said the extended recess was to draw up a full legislative program, anti-Brexiters are fuming that it will cut short any time they could have to debate a plan to avert a no-deal divorce from the EU, with some calling it a "coup".

Arch-leaver Johnson, however, could face a vote of no confidence, which could lead to another general election and continued uncertainty for the already struggling economy.

Oil prices edged down after two days of healthy gains fueled by data showing a huge drop in US stockpiles that eased worries about the impact of the trade war on demand. — AFP