Hang Seng index pares gains as investors watch Hong Kong developments

Hong Kong stocks pared gains on Thursday afternoon after seeing a surge on Wednesday following reports surrounding the withdrawal of a controversial extradition bill.

The Hang Seng index fell 0.64% in afternoon trade, paring gains from the previous day when it surged almost 4% on the back of reports on the withdrawal, prior to the announcement.

In mainland China, the Shanghai composite gained 0.91%, while the Shenzhen component rose 0.91% and Shenzhen composite added 0.94%.

Other major markets in Asia Pacific saw gains on the day.

The Nikkei 225 in Japan surged 2.12% to close at 21,085.94, while the Topix saw gains of 1.84% to finish its trading day at 1,534.46. Over in South Korea, the Kospi closed 0.82% higher at 2,004.75. Australia's S&P/ASX 200 added 0.92% to end its trading day at 6,613.20 as majority of the sectors saw gains.

Overall, the MSCI Asia ex-Japan index gained 0.62%.

Hong Kong Chief Executive Carrie Lam on Wednesday fully withdrew a controversial extradition bill in Hong Kong that had sparked protests for months. It was one of five demands that protesters have been fighting for.

Still, Michael Yoshikami, founder and CEO of Destination Wealth Management, told CNBC's "Squawk Box" on Thursday that the "damage has been done."

"While I think this certainly appears to be a positive step forward toward some sort of resolution, I think the impact is going to be felt in Hong Kong," he said. "I think that is going to be something that we're going to be dealing with for a significant period of time, months, for sure."

Asia-Pacific Market Indexes Chart

Elsewhere in Europe, lawmakers in the United Kingdom defeated British Prime Minister Boris Johnson in parliament on Wednesday, moving to prevent him from taking the country out of the European Union without a formal agreement on October 31.

China says US agrees to meet for talks

U.S. futures jumped during Asia hours on the back of news that for another round of negotiations.

At around 2:44 a.m. ET Thursday, futures rose about 200 points, pointing to an implied opening gain of 210.53 points. Futures on the S&P 500 and Nasdaq both also pointed to opening gains.

China's Commerce Ministry had issued a statement on Thursday morning saying that Liu He, China's top negotiator on trade, spoke with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

The two sides agreed to hold another round of trade negotiations in Washington, D.C., towards the beginning of next month, and consultations will be made in mid-September in preparation for the meeting, the statement said.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.505 after weakening from levels above 98.8 yesterday.

The Japanese yen, often seen as a safe-haven currency in times of turmoil, traded at 106.45 after easing from levels below 105.9 yesterday. The Australian dollar changed hands at $0.6807 after rising from the $0.676 handle in the previous session.

Oil prices fell in the afternoon of Asian trading hours, with international benchmark Brent crude futures edging down 0.18% to $60.59 per barrel and U.S. crude futures declining 0.37% to $56.05 per barrel.

— CNBC's Fred Imbert and Grace Shao contributed to this report.

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