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China pushes back against yuan slide, pledges stability

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Major Chinese banks ditching US dollar to prop up domestic currency

Yi's remarks come at a time when the Chinese currency is under considerable pressure: The onshore yuan weakened past 6.7 per dollar in early trading on Tuesday for the first time since Aug 9, 2017.

Major currencies marked time on Wednesday and the Chinese yuan recovered from 11-month lows after authorities took steps on Tuesday to calm financial markets rattled by trade war worries, report Agencies. The downturn came ahead of July 6, when US tariffs on $34 billion worth of Chinese goods kick in. Retail stocks were down 3.58 percent, with Fast Retailing lower by 2.87 percent.

"The (trade dispute) impact is limited as we have localized technologies and suppliers (about 70 percent)", Zhang Yu, senior vice president of BOE, said during a display show held recently in Shanghai.

After the morning drop, market participants suspected the central bank of intervening in the currency market to support the yuan.

The Hong Kong stock market on Tuesday wrote a finish to the two-day winning streak in which it had advanced nearly 600 points or 2.1 percent.

The Chinese yuan surged against the dollar on Wednesday, continuing a recovery that began the previous afternoon after China's central bank chief pledged to keep the exchange rate "basically stable". The yuan retreated 0.5 per cent to an eight-month low after depreciating by a record in June.

The European stock futures point to gains of 0.3 percent in France's CAC and Britain's FTSE and 0.5 percent in Germany's DAX.

On equity markets, Hong Kong dived as much as 3.3 per cent at one point to nine-month lows, hit also by a USA move to block China Mobile from offering services to the U.S. market.

Officials in China, the epicenter of the global trade row, have warned the United States that the tit-for-tat tariffs on each others' goods will ultimately prove detrimental for American businesses and jobs.

The mood was more cheerful in Europe where a pan-European equity index rose half a per cent, the euro firmed marginally and bond yields rose after German Chancellor Angela Merkel struck the deal with her Bavarian conservative coalition partners.

That helped MSCI's world index to rise 0.25 percent, inching further off 2-1/2 month lows hit last week.

Focus was on whether the RBA makes a mention of the recent U.S.

Dollar trading is also expected to be range-bound as investors await the publication on Thursday of minutes from the Federal Reserve's June meeting, and Friday's U.S.jobs data. -China trade tensions may pose a risk. Oil is one of Canada's major exports.

The lead from Wall Street is negative as stocks failed to sustain an early upward move in Tuesday's abbreviated session, finishing in the red ahead of the July 4 holiday.

Oil prices climbed after Libya declared force majeure on some of its supplies, with Brent crude rising 0.8 percent to $77.93 per barrel and West Texas Intermediate (WTI) crude was up 1.1 percent to $74.77 a barrel.

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