* MSCI AxJ gains 0.15%, close to 2-year peak
* Nikkei +1.5%, ASX 200 +0.4%
* U.S. and China see progress on trade talks
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Scott Murdoch and Tom Westbrook
SINGAPORE/HONG KONG, Aug 25 (Reuters) - Asian stock markets were mostly higher on Tuesday after the U.S and China indicated progress in trade talks, and as hopes of new coronavirus treatments boosted broader sentiment among global investors.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.1% and was trading just below a two-year high.
Japan's Nikkei .N225 rose 1.4%, while banking stocks led Australia's S&P/ASX 200 .AXJO up 0.34%.
Futures suggest a positive start to Europe's trading day, with Euro STOXX 50 futures STXEc1 up 0.4% and FTSE futures FFIc1 up 0.3%. S&P 500 futures ESc1 extended modest gains in Asia and were last up 0.4%.
The upbeat sentiment in Asia on Tuesday followed reports that top U.S. and Chinese officials see progress in resolving concerns around the Phase 1 trade deal reached between the two countries in January. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He, the U.S. Treasury said in a statement on Tuesday, during a "regularly scheduled call".
China's commerce ministry said in a statement there had been "constructive dialogue", which followed the U.S. Treasury declaring that "both sides see progress".
Markets have worried that rising tensions between Washington and Beijing over a host of issues could scupper the deal.
"This is consistent with market expectations of the Phase 1 deal staying healthy and likely to hold even as U.S.-China tensions flare up along non-trade dimensions - technology, access to capital, geopolitics," Citigroup (NYSE:C) analysts said in a research note.
Bucking the regional rally, however, were Hong Kong and China markets, with the Hang Seng .HSI slipping 0.4% in the afternoon session while the Shanghai Composite .SSEC gave up earlier gains to fall 0.32%. .SS
Ord Minnett investment advisor John Milroy said equities market sentiment remained driven by elevated global liquidity.
"The strong rebound in markets continues to be driven by the large amounts of money governments and central banks keep throwing at the system," Milroy said.
"There is no reason to expect markets to stop anytime soon even in the face of reduced global activity levels. Investors keep looking ahead with markets trading well above historical price to earnings levels."
Markets have also been supported by broader optimism about medical solutions to end the coronavirus pandemic. U.S. regulators on Sunday authorised the use of blood plasma from recovered COVID-19 patients as a treatment option, helping the S&P 500 .SPX 1% higher to another record close overnight.
Shares of AstraZeneca AZN.L also rose on a Financial Times report that the U.S. government was considering fast-tracking its experimental vaccine. seemed to overshadow a rise in coronavirus cases in Europe and the first documented case of human re-infection with COVID-19, where a man in Hong Kong caught the virus again some four months after first being infected. currency markets, the dollar edged higher, defying pressure from a gain in stocks that often leads investors to sell dollars for riskier currencies. FRX/
Investors are awaiting a Thursday speech from Federal Reserve Chairman Jerome Powell and expect he might address the future approach to inflation, possibly allowing it to run hotter than 2% to make up for years of undershooting.
The dollar also found support from an overnight rise in yields. That kept the euro EUR=EBS to $1.18 and the Aussie AUD=D3 at $0.7170 in Asian trade.
In commodity markets, oil clung to overnight gains after storms disrupted U.S. production. Brent crude futures LCOc1 firmed 8 cents, or 0.2%, to $45.21 a barrel and U.S. crude CLc1 dipped to $42.52.
The stronger dollar held gold XAU= to $1,929.6 an ounce. A light data calendar in Asia has investors looking to Germany's IFO business survey due at 0800 and U.S. consumer confidence data at 1400 GMT.