Most Southeast Asia stock markets closed lower on Tuesday, as East Vietnam Sea tensions were seen as casting a shadow on U.S.-China trade talk progress, while Vietnam rallied for the second straight session to its highest level in nearly two months.

Washington and Beijing will commence high-level trade talks this week to negotiate an end to their bitter trade dispute.

Despite positive responses from both sides, the sailing of two U.S. destroyers near the East Vietnam Sea, and China's subsequent anger over the move appeared detrimental to negotiations.

The Indonesian index fell the most in the region, closing 1.1 percent lower in its worst session this year, weakened by a slump in financial and telecom stocks.

The country's biggest bank by market value, Bank Central Asia, shed 0.6 percent, whereas Telekom Indonesia lost 2.8 percent The Philippine benchmark slipped 0.6 percent, dragged by consumer and industrial stocks.

Meanwhile, the country's trade deficit narrowed in December as imports tumbled for the first time in a year.

The stock index has outperformed other exchanges in the region so far in 2019, gaining about 7.3 percent.

"We are mildly concerned about the surprise pullback in capital goods and raw materials. If this continues, this could show that recent aggressive tightening by the BSP (Bangko Sentral ng Pilipinas) is starting to bite into investment appetite, hampering the nascent investment-driven growth story that we have witnessed of late," ING said in a note.

Meanwhile, Vietnam benchmark rose for the second straight session and ended up 1.2 percent at its highest level since Dec. 17, with real estate and consumer stocks leading the gains.

Property developer Vingroup JSC scaled 4.9 percent, while Saigon Beer Alcohol Beverage Corp jumped 1.9 percent.

Vietnam was also chosen to host this month's summit between U.S. President Donald Trump and his North Korean counterpart Kim Jong Un.