Mainland markets slipped on Thursday ahead of a meeting between President Xi Jinping and his US counterpart Donald Trump, with investors cautiously optimistic they will agree on a trade war truce that may help sustain the bullish sentiment.

The benchmark Hang Seng Index rose 199 points, or 0.76 percent, to open at 26,545 on Thursday, as traders returned to work following the Chung Yeung public holiday.

On the mainland, the benchmark Shanghai Composite Index, which had been hitting fresh decade highs this week on hopes for an imminent de-escalation, was down 0.21 percent at 4,007 while the Shenzhen Component Index was 0.22 percent lower at 13,661.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, was down 0.32 percent at 3,313.

While investors have been somewhat heartened by signs of cooling trade tensions between the world's top two economies after recent escalations, there is also a sense of deja vu that the real deal may offer far less to celebrate.

The stakes are particularly high given the breadth of this year's rally across Chinese markets. Investors will look past broad comments and scrutinize any details that may come out after the meeting, otherwise reaction might be muted, analysts said.

"Markets head into the Trump-Xi meeting cautiously optimistic, buoyed by recent signals of goodwill from both sides leading up to the meeting," said Gary Tan, portfolio manager at Allspring Global Investments in Singapore.

A constructive tone should help sustain risk appetite among investors even though another truce extension and limited progress on structural issues remain the base case, Tan said, adding that the firm remains selectively positioned in China.

Beyond mainland stocks, the Hang Seng Index has surged more than 30 percent, ranking it among the best performing markets globally.

Despite US tariffs, Chinese exports to other parts of the world have remained resilient, while progress in China's adoption of artificial intelligence and its development of semiconductors and innovative drugs this year has also given comfort to global investors.

Asian and global emerging markets funds made significant increases in their exposure to the mainland in September, HSBC said in a note on Monday, pointing out positioning in mainland China for Asia funds that HSBC tracks is near a five-year high.

Still, some analysts caution that markets may be getting ahead of themselves with upside surprises already priced in.

Previous trade negotiations have seen promising starts followed by setbacks. (Reuters/Xinhua)