GLOBAL MARKETS-Asian shares gain on 'risk-friendly' yuan fixing, oil falters

* Chinese shares reverse losses on firmer than expected CNY
fixing
* Japanese markets closed for public holiday
* Oil ends multi-day winning streak

By Swati Pandey
SYDNEY, May 6 (Reuters) - Asian shares extended gains on
Wednesday, as investors saw China's yuan fixing offering a
modest olive branch to Washington amid a resurgence in trade
tensions, while oil ended its winning streak on oversupply fears
and weak demand.
China's central bank set the yuan CNY= at a broadly
neutral midpoint, analysts said, helping take the focus off the
exchange rate, a typically contentious point in Sino-U.S. ties.
That helped mainland stocks claw back initial losses on their
first day of trade since breaking for a holiday last
week. CNY/ .SS
Wall Street futures turned around in afternoon trading, with
E-minis for the S&P500 ESc1 rising 0.5%.
European futures pointed to a weak start after a court
decision challenging German participation in Europe's stimulus
program fanning worries about a bumpy recovery.
Futures for the Eurostoxx 50 STXEc1 were flat while those
for Germany's DAX FDXc2 were off 0.1%. London's FTSE futures
FFIc1 eased 0.1%.
MSCI's broadest index of Asia Pacific shares outside of
Japan .MIAPJ0000PUS climbed 0.8% in relatively light volumes
with Japanese markets closed for a public holiday.
China, opening for the first time since Thursday, reversed
early losses sending the blue-chip index .CSI300 up 0.6%. Hong
Kong's Hang Seng index .HSI climbed 1.5% while South Korea's
KOSPI jumped 1.76%.
"The People's Bank of China went a long way to extinguishing
one major trade war hotspot by setting the yuan reference rate
on a more risk-friendly level," said Stephen Innes, chief
markets strategist at AxiCorp.
"USD/CNH dropped about 200 pips on the stable fix, and a
recovery in risk sentiment ensued, and there was no
follow-through on U.S. President Trump's threat to China."
U.S. President Donald Trump has repeatedly taken aim at
China as the source of the pandemic and warned that it would be
held to account.
On Tuesday, he urged China to be transparent about the
origins of the novel coronavirus that has killed more than a
quarter of a million people worldwide since it started in the
Chinese city of Wuhan late last year. On Wall Street overnight, the S&P 500 pared earlier gains
after U.S. Federal Reserve Vice Chair Richard Clarida warned
that economic data would get much worse before getting better.
The index .SPX finished 0.90% higher, the Dow .DJI rose
0.6% and the Nasdaq Composite .IXIC added 1.1%.
In currencies, the yen scaled a three-year high against the
euro and a seven-week peak on the dollar on Wednesday after the
German court decision. FRX/
Germany's highest court on Tuesday gave the European Central
Bank three months to justify purchases under its bond-buying
programme, or lose the Bundesbank as a participant in a scheme
aimed at cushioning the economic blow from the coronavirus.
The decision spooked investors who have been caught this
month between grim economic figures and worries about worsening
U.S.-China relations, and optimism over easing COVID-19
lockdowns in many countries.
The euro EUR= hit a one-week low of $1.0826 overnight and
slumped to a three-year trough of 115.09 yen EURJPY= in Asia,
as traders fretted about both the scheme and the euro's future.
The safe-haven yen JPY= cracked through resistance against
the dollar to hit a seven-week high of 106.22.
The risk-sensitive Aussie AUD=D3 and kiwi NZD=D3 were up
on the greenback, holding above 64 cents and 60 cents,
respectively. The pound GBP= was steady at $1.2431.
The dollar index =USD was flat at 99.818.
Traders will keep an eye for the ADP National Employment
Report of private U.S. payrolls on Wednesday. It could foretell
the damage to be revealed on Friday in the official U.S.
government measure of jobs in April, estimated to show nearly 22
million jobs were lost last month.
In commodities, U.S. crude futures CLc1 stumbled 22 cents
to $24.34 a barrel after five straight sessions of gains while
Brent crude LCOc1 skidded 25 cents $30.72. O/R
Oil prices had gained recently as European and Asian
countries ended their lockdowns to halt the coronavirus spread
and as producers axed supply after the demand crunch.
But analysts cautioned the rebalancing of the market would
be choppy.
"We're talking about normalisation of supply and demand but
we've got a long way to go," said Lachlan Shaw, National
Australia Bank's head of commodity strategy.
"There are a lot of supply cuts that have come through. That
combined with some early signs of demand lifting has meant the
rate of inventory build is slowing."
Spot gold XAU= eased 0.2% to $1,702 an ounce.

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