Asian markets were mostly higher Tuesday with two exceptions: The Nikkei 225 and the Shanghai Composite index, which ended 10 and four-day winning streaks.
In Washington, President Barack Obama kicked off a two-day meeting with Chinese leaders, calling U.S.-Chinese relations as "important as any bilateral relationship in the world."
The meetings were to include discussions of climate change, technology, nuclear weaponry, and the economy, and likely to sidestep issues of contention, such as human rights, The New York Times reported.
Although Obama conceded he had "no illusion" the countries saw eye-to-eye on everything, the administration does not view the current environment conducive to a head-strong push on human rights in part due to the "yawning" federal deficit and China's role as the largest foreign creditor, the Times said.
China's economy is also growing, while the U.S. economy is groping for a tangible toe-hold in a recovery that appears ready to commence, but has yet to turn the corner in several key markets.
A case in point: The Commerce Department said new home sales grew 11 percent in June, the largest monthly gain in nine years. But prices are still low and analysts said buyers were sweeping in to take advantage of historically low interest rates and temporary tax relief. Sales are still off substantially from a year ago, when the market was in a downturn.
Economists predict the unemployment rate will also rise, suppressing growth in the consumer-driven U.S. economy. Obama Monday reiterated a familiar theme: U.S. citizens should cut back on consumption while the Chinese should consume more.
U.S. markets turned in marginal gains Monday. On Tuesday, the Shanghai index lost 0.6 percent while the Nikkei 225 in Tokyo lost 0.01 percent.
Elsewhere in Asia, the Hang Seng index in Hong Kong Singapore Straits Times both rose 1.34 percent. The S&P/ASX in Australia rose 0.72 percent.
The Securities and Exchange Commission moved to make a temporary restriction on short-trading permanent and increase the amount of information available on the practice, which some say undermines the value of stocks.
Short selling involves a trader selling borrowed stock, hoping the price falls, which enables the trader to purchase the stock at a lower value and pocket the difference.
In "naked" short selling, the trader operates in the dark, borrowing stock that may or may not be available. In the fall, the SEC required brokerage firms to locate stocks before initiating a short sale, a rule made permanent Monday.
But, some say the rule change does not go far enough.
"The The SEC apparently is content to let potential solutions sit on the shelf for another two months," Sen. Ted Kaufman, D-Del., said, referring to a new round of discussions on short-selling the SEC scheduled for September.
However, "given the dangers of abusive short selling, if the market were to decline precipitously again and the banks propped up by taxpayer funds were to become vulnerable again, that is not an insignificant risk," Kaufman said in a statement.
In Europe, stocks mostly fell in midday trading Tuesday. The FTSE 100 in Britain lost 0.28 percent, while the DAX 30 in Germany dropped 0.06 percent. The CAC 40 in France slid 0.01 percent, while the broader DJStoxx 600 dropped 0.14 percent.