* Shanghai Composite and blue chip index jump 2%
* S&P 500 futures wobbly amid U.S. stimulus doubts
* USD/CNH leaps after PBOC tweaks FX policy
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook
SINGAPORE, Oct 12 (Reuters) - Chinese stocks led Asian
markets higher on Monday as investors bet on a steady recovery
for the world's no. 2 economy, though caution about the fate of
U.S. stimulus kept the dollar firm and a central bank policy
tweak unwound some of the yuan's gains.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.8% to 2-1/2-year highs, buoyed by a 2%
gain in Chinese blue chips .CSI300 and a 1.5% rise by Hong
Kong's Hang Seng index .HSI . Japan's Nikkei .N225 slipped
0.3% as investors fretted about corporate earnings. .T
"If capital is moving on relative growth rates, then China
is looking quite attractive," said Chris Weston, head of
research brokerage Pepperstone in Melbourne. Equities are cheap,
yields advantageous and the outlook solid, he said.
"From a virus perspective as well, we're seeing concerns in
Europe, while China is considered a quasi-safe haven."
China has returned from an eight day Mid-Autumn festival
with investors encouraged by a robust rebound in tourism and
ebbing coronavirus cases. Qingdao city said on Monday it will conduct COVID-19 tests
for the entire population of more than 9 million people over
five days after small number of new cases. Elsewhere, in the U.S. midwest, infections are at record
levels and the World Health Organization is urging fresh curbs
for Europe. Coronavirus aid plans in the United States are also in
disarray, with the Trump administration on Sunday calling on
Congress to pass a stripped-down relief bill while talks on a
more comprehensive proposal were again at an impasse.
S&P 500 futures ESc1 wobbled either side of flat in the
Asia session, while European futures STXEc1 edged higher.
"The economic fallout of COVID-19 has accelerated the
relative decline of the U.S. as the world's economic engine,"
said ANZ chief economist Richard Yetsenga. "It is also
increasing the centrality of Asia - and particularly, of China."
Chinese blue chips have gained nearly 17% this year,
compared with an almost 8% gain by the S&P 500 .SPX .
Foreigners' buying of Chinese government bonds hit its fastest
pace in more than two years last month. WOBBLES
In currency markets, a 0.4% drop in the yuan dragged the
China-sensitive Australian dollar AUD=D3 lower and underpinned
small but broad gains for the dollar against other majors.
FRX/
The People's Bank of China has scrapped a requirement for
banks to hold a reserve of yuan forward contracts, removing a
guard against depreciation. Traders said that suggested authorities were discomfited by
recent gains in the currency. However the lack of an
aggressively weaker setting of the onshore trading band cooled
some of those concerns and the yuan pared losses a little.
The yuan is up more than 7% since late May and had shot
higher on Friday as investors wagered that a Joe Biden
presidency would drive smoother Sino-U.S. relations. It last sat
at 6.7211 per dollar in onshore trade CNY= . CNY/
"We continue to expect a stronger yuan on the back of our
expectation of solid Chinese growth and favourable interest rate
differentials between China and the U.S.," Goldman Sachs'
analysts said in a note, with a 12-month yuan forecast at 6.50.
The euro EUR= edged 0.1% lower to $1.1816 and the yen
JPY= was broadly steady at 105.55 per dollar. The kiwi
NZD=D3 dipped 0.1% with the softer yuan to sit at $0.6661.
In commodity markets, oil prices were back under pressure
after the resolution of an oilworkers strike in Norway and the
resumption of production after a storm in the Gulf of Mexico.
Brent crude futures LCOc1 slipped 0.9% to $42.48 a barrel
and U.S. crude futures were down about 0.8% at $40.26.
Gold XAU= held steep Friday gains at $1,927 an ounce as
investors stuck with bets that U.S. stimulus would eventually
arrive and drive inflation to the benefit of bullion.
The U.S. bond market is closed on Monday for Columbus Day.