By Ben Blanchard and Andrew Galbraith
BEIJING/SHANGHAI (Reuters) - Chinese state media gave a cautious welcome on Monday to the trade war truce agreed by China and the United States at the weekend, as Chinese shares, commodities and the yuan currency surged even as uncertainly remains about the deal.
China and the United States agreed to halt new tariffs during talks between Chinese President Xi Jinping and U.S. President Donald Trump in Argentina on Saturday following months of escalating tensions on trade and other issues.
In a meeting lasting two and a half hours, the United States agreed not to raise tariffs further on Jan. 1, while China agreed to purchase agricultural products from U.S. farmers immediately.
The two sides also agreed to begin discussions on how to resolve issues of concern, including intellectual property protection, non-tariff trade barriers and cyber theft.
But in an editorial, the official China Daily warned that while the new "consensus" was a welcome development and gave both sides "breathing space" to resolve their differences, there was no "magic wand" that would allow the grievances to disappear immediately.
"Given the complexity of interactions between the two economies, the rest of the world will still be holding its collective breath," it said.
China's benchmark Shanghai Composite index <.SSEC> rose 2.9 percent by the midday break, and blue-chip shares <.CSI300> surged 3.1 percent.
Government bond futures fell as shares rallied, with the 10-year treasury futures for March delivery
Shares in Hong Kong also jumped, with the Hang Seng index <.HSI> adding 2.7 percent and the China Enterprises Index <.HSCE> jumping 2.8 percent.
Still, analysts cautioned it may have only bought some time for more wrangling over deeply divisive trade and policy differences, and said China's economy will continue to cool regardless, under the weight of weakening domestic demand.
"This is a relief rally," said Paul Kitney, chief equity strategist at Daiwa Capital Markets in Hong Kong.
The agreement "is not a ceasefire, it's just a de-escalation. The existing tariffs are still having a negative impact on the Chinese economy, they haven't gone away".
China's factory activity grew slightly in November, a private survey showed on Monday, though new export orders extended their decline in a further blow to the sector already hurt by the Sino-U.S. trade frictions.
"It's 90 days. It's nothing and it doesn't really make any difference. People have already started to reconsider their sourcing arrangements," said Larry Sloven, who has been sourcing and manufacturing in China for three decades.
"Nobody wants to live in a false reality."
Widely read Chinese tabloid the Global Times, published by the ruling Communist Party's official People's Daily, warned people had to have realistic expectations.
"The Chinese public needs to keep in mind that China-U.S. trade negotiations fluctuate. China's reform and opening-up's broad perspective recognises that the rest of the world does things differently," it said in its editorial.
There are also differences in the Chinese and U.S. accounts of what was agreed.
The White House said China was "open to approving the previously unapproved" deal for U.S. company Qualcomm Inc
Chinese state media has made only scant mention of the Qualcomm issue, which was not addressed by the Chinese government's top diplomat at a news conference in Buenos Aires on Saturday night.
In July, Qualcomm - the world's biggest smartphone-chip maker - walked away from a $44 billion deal to buy NXP after failing to secure Chinese regulatory approval, becoming a high-profile victim of the China-U.S. trade dispute.
There was also caution from the U.S. business community.
William Zarit, chairman of the American Chamber of Commerce in China, said the outcome of the meeting was "as good as we could have expected" considering the complex issues involved.
"But probably the most challenging area to resolve - China's discriminatory economic policies based on state support and domestic market protectionism - needs to be addressed in order to level the playing field and have a sustainable commercial relationship based on fairness and reciprocal treatment."
(Reporting by Ben Blanchard and Andrew Galbraith; Additional reporting by David Stanway in Shanghai, and Noah Sin and Anne Marie Roantree in Hong Kong; Editing by Sam Holmes and Neil Fullick)