China's central bank on Friday cut the amount of cash that banks have to hold as reserves for the fifth time in a year, freeing up $116 billion for new lending.

A group of U.S. delegates are meeting with their counterparts in Beijing this week for the first face-to-face talks since leaders of the two countries agreed to a 90-day truce in a trade war in December.

"The market is improving its expectations over the macro-economic situation amid Beijing's attempts to stabilise the economy," analysts from Huatai Futures said in a note.

Meanwhile, Baoshan Iron & Steel Co, the largest listed steel firm in China, said it would raise prices of some steel products for March delivery by 50 yuan ($7.30) a tonne.

Benchmark construction steel rebar prices on the Shanghai Futures Exchange settled 1.8 percent higher at 3,520 yuan a tonne. They jumped as high as 3,526 yuan before the market closed at 0700 GMT, a level last seen on Dec. 21, 2018.

However, analysts also warned of waning demand in the off-peak season.

Inventories of steel products at Chinese traders rose for the second week in the week ended Jan. 4, adding 416,000 tonnes from the prior week to 8.38 million tonnes, data compiled by Mysteel consultancy showed. Rebar stocks were up 6.4 percent at 3.35 million tonnes and hot-rolled coil stocks were up 2.5 percent at 1.8 million tonnes.

Construction sites in northern China typically halt work in winter due to freezing conditions.

Investors are closely watching the Sino-U.S. trade talks, as well as waiting for further potential stimulus measures from Beijing that could ease downward pressure on China's economy, the analysts said.

The most-active iron ore contract on the Dalian Commodity Exchange closed 1.8 percent higher at 514.5 yuan a tonne, just shy of its day's peak of 515 yuan, its strongest since Oct. 29.

Coking coal futures climbed 1.5 percent to 1,195 yuan, while coke for May delivery rose 1.5 percent to 1,964 yuan.

($1 = 6.8455 Chinese yuan)

(Reporting by Muyu Xu and Dominique Patton,; Editing by Joseph Radford and Sherry Jacob-Phillips)