Tokyo's benchmark stock index closed flat on Thursday, trimming early losses after the news that China and the US would hold trade talks.
The key Nikkei 225 index, which dropped 1.20% in early trade, was down 0.05% to end at 22 192.04. The broader Topix index lost 0.64% at 1 687.15.
"It is hard to tell how the talks will go but it's a positive signal that the two countries are looking for some compromise plan," said Makoto Sengoku, market analyst at Tokai Tokyo Research Institute.
The commerce ministry in Beijing said on Thursday that China will send a senior negotiator to the United States later this month to resume trade talks.
"If they were determined to fight it out, they wouldn't meet," Sengoku told AFP, while noting the current thin trading volume contributed to big price swings.
Global stocks fell Wednesday as investors fled riskier assets amid renewed worries over Turkey.
Turkey said it was hiking tariffs on imports of several key US products in retaliation for American sanctions, as the bitter dispute between the two allies that has battered the Turkish lira showed no sign of ending.
The dollar was trading at ¥110.81, up from ¥110.73 in New York on Wednesday afternoon.
In individual stocks trade, game companies continued to fall after China's regulators have reportedly frozen approvals of game licences amid a government shake-up.
Nintendo fell 1.00% to ¥34 500 and Sony lost 0.88% to ¥5 947.
Toyota was down 0.58% at ¥6 775, while Uniqlo operator Fast Retailing jumped 2.14% to ¥49 270.
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