HONG KONG (Reuters) – Chinese stocks were weaker on Tuesday as the tariff war between Washington and Beijing escalated though losses were contained after conciliatory comments from U.S. President Donald Trump and amid suspected state-backed buying of equities.

Both the Shanghai Composite and the blue-chip CSI300 opened down 1 percent, but recovered some of these losses, aided, according to some analysts, by “national team” purchases.

Zhang Qi, analyst at Haitong Securities said there was “buying of key stocks” by state-backed players, noting that “volume in morning trade is close to half of yesterday’s full session.”

Earlier, Trump said he is holding fire on taxing the remaining $325 billion of Chinese goods, and announced that he will meet with Chinese President Xi Jinping in June, reigniting hopes for an agreement to end the tariff tussle.

His comments came after China announced on Monday higher tariffs on $60 billion of U.S. goods, in retaliation of Washington’s decision last week to hike its own levies on $200 billion in Chinese imports.

In late morning trade, the Shanghai benchmark was down 0.4%, while the blue-chip CSI 300 index was down 0.2%. The smaller Shenzhen market was down 0.5%.

CSI300’s sub-indexes for the financial sector and the consumer staples sector were both flat, while healthcare shares slid 0.5%.

The start-up Chinext board fell 0.4% despite MSCI confirming it will include part of the board in its benchmark emerging market index.

Sticking points in Sino-U.S. negotiations remain, with White House Economic Adviser arguing for “very strong” enforcement provisions in an eventual deal, and Beijing insisting that it would not swallow any “bitter fruit” that harmed its interests.

The Hong Kong stock market, returning from a holiday, fell over 1.5% in its first reaction to the tariff retaliation.

The offshore yuan climbed on Trump’s comments, rebounding from a four-month low in early trade to 6.8943, up 0.26% on the day, while the onshore yuan firmed 0.1% against the greenback to 6.8737. [FRX/]

Prior to the onshore open, the People’s Bank of China put it midpoint at its weakest in four months, after the currency wiped out its year-to-date gains on Monday. But traders said the fix was still higher than market expectations.