(Updates with fresh levels throughout, adds analyst comment)
* MSCI ex-Japan up 0.2 pct, South Korea’s Kospi reverses losses
* Trade volatile as U.S.-North Korea summit gets underway
* Dollar rises to the highest in 3 weeks against yen
By Swati Pandey
SYDNEY, June 12 (Reuters) - The dollar jumped to a 3-week top on Tuesday and Asian shares rose as U.S. President Donald Trump said a summit meeting with North Korea’s Kim Jong Un had made “a lot of progress,” boosting hopes of a landmark deal to end a nuclear standoff on the Korean peninsula.
Asked by reporters how the historic talks were going, Trump said: “A lot of progress - really very positive. I think better than anybody could have expected. Top of the line, very good. We’re going now for a signing.” He gave no further details.
Kim had earlier said the meeting was “a good prelude to peace”, just months after the two leaders traded insults and tensions spiralled in the region over the reclusive regime’s nuclear programmes.
Yet, there was some unease among investors about the outcome of the talks given the tense relations between the two nations. The combatants of the 1950-53 Korean War are technically still at war, as the conflict, in which millions of people died, was concluded only with a truce.
The dollar rose against the safe-haven yen, while the Korean won gained 0.2 percent to edge above a recent two-week trough. E-Minis for the S&P 500 were barely changed.
In Asian equity markets, trading was volatile with Japan’s Nikkei paring early gains to add 0.5 percent after earlier rising as much as 0.9 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan seesawed between positive and negative territory, and was last up 0.2 percent. South Korean shares reversed losses to inched 0.1 percent higher, while Chinese shares were buoyant after starting in the red with the blue-chip jumping 0.9 percent.
“The key question is whether this summit will lead to a lasting, materially positive outcome,” analysts at OCBC said in a note.
“From an international relations perspective, this appears unlikely. What is perhaps more likely, is a positive opening act in a long drawn drama,” they said.
“Expect a positive risk environment to persist if the summit can conclude without hiccups.”
Many analysts said the bar was pretty low for what will be deemed a ‘successful’ summit, given the past failures in talks with North Korea.
“So today, we have the opportunity for a historic meeting, a possible end to the Korean war, and a possible move to denuclearise, and maybe even demilitarize the Korean peninsula,” said Robert Carnell, chief economist Asia-Pacific at ING.
“All of that’s great, but how can you make money from it. Well, the short answer is you probably shouldn’t even try.”
Carnell said that a far bigger “existential global threat” was the ongoing tariff dispute after Trump upset the Group of Seven’s efforts to show a united front, choosing to back out of a previous joint communique.
The action drew criticism from Germany and France, and Trump called Canadian Prime Minister Justin Trudeau “very dishonest and weak.”
However, “markets are generally shrugging off the G7 trainwreck,” said Ray Attrill, head of forex strategy at National Australia Bank.
Instead, they are looking ahead to a busy week.
Tuesday’s North Korea summit will be followed by policy meetings of the U.S. Federal Reserve and the European Central Bank as well as a Brexit bill vote in the British parliament.
The dollar was well bid on Tuesday, with the dollar index up 0.1 percent against a basket of major currencies.
The U.S. Federal Reserve is virtually guaranteed to raise interest rates this week while investors are focused on the U.S. monetary policy outlook.
On the safe haven yen, the dollar jumped to a three-week top of 110.49 in early deals. It was last at 110.23.
Helping calm markets were comments from Italy’s new coalition government that it had no intention of leaving the euro zone and planned to cut debt.
The euro stepped back from a three-week high of $1.1840 to be last down 0.1 percent at $1.1769.
In commodities, U.S. crude was rose 14 cents to $66.24 per barrel, while Brent dipped 5 cents to $76.51.
Spot gold slipped 0.2 percent to $1,297.31 an ounce.
Editing by Shri Navaratnam