* China shares extend rally by 1.5%
* Regional stocks mixed as U.S. futures point to weak start
* A$ steady as RBA keeps cash rate on hold
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Hideyuki Sano and Scott Murdoch
TOKYO/HONG KONG, July 7 (Reuters) - The Chinese share market
extended its positive run on Tuesday, in line with the mainland
government's push for a stronger market, while the rest of the
region turned cautious on equities.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS see-sawed during the local session and was down
0.2%, after it briefly traded in positive territory.
The negative performance on Tuesday came after the index
rose 7% which took it to a 4-1/2 month high in the past five
trading sessions.
Japan's Nikkei .N225 gave up 0.7% while U.S. stock futures
shed 0.25% EScv1 in Asia after hefty gains on Monday in the
wake of surging Chinese shares.
In China, Shanghai's blue chip CSI300 index and Shenzhen
shares .CSI , which had gained more than 13% in the past five
sessions, rose a further 1.5%, led by rises in the tech sector
.SSEINT .
Ample Finance Group director Alex Wong said while Chinese
market sentiment was positive, investors remained cautious to
the risk of that being short-lived.
"The mood is still quite strong...and I think people will be
willing to hold on for a while as we absorb some of the positive
news in the world," Wong told Reuters in Hong Kong.
"The upward momentum is strong but people are alert to the
prospect of any reversal of that. If that occurs we could see a
sharp correction."
Hong Kong's Hang Seng index .HSI was down 0.86% despite
the city's chief executive Carrie Lam saying on Tuesday market
reaction had been positive to China's recently introduced
national security law.
Analysts said jawboning by the Chinese government through a
state-sponsored journal on the importance of "fostering a
healthy bull market" published on Monday had spurred the buying
binge in mainland Chinese shares. The current China rally has echoes of the past, especially
during 2007 and in the buying binge that followed the crash in
2015 that was largely driven by Chinese retail investors.
"Shades of John F. Kennedy's 'Ask not what your country can
do for you' inauguration speech here and as close as you might
get to a Chinese government 'put' as anything the Fed has done
to date vis-à-vis the U.S. stock (and credit) markets," said Ray
Attrill, head of FX strategy at NAB, in a research note.
A sharp rebound in U.S. services industry activity in June,
almost returning to pre-pandemic levels, also helped to whet
investors' risk appetite. Still, new coronavirus cases surged in several states,
forcing some restaurants and bars to close again in a setback to
the budding recovery, keeping gains in risk assets in check.
In the currency market, the Chinese yuan made headway,
hitting its highest levels in nearly four months. The renminbi
rose 0.1% to 7.0115 per dollar CNY=CFXS .
"The yuan is supported by the risk-on mood in the Chinese
share market despite lingering uncertainties over the U.S.-China
relations and an anticipated slow pace of recovery," said Ei
Kaku, senior strategist at Nomura Securities.
"Nor have we seen large capital flows that would boost the
yuan," she said.
Other major currencies were little changed, with the yen
flat at 107.41 to the dollar JPY= and the euro unchanged at
$1.1312 EUR= .
The Reserve Bank of Australia held the official cash rate
steady at 0.25% for July, which is a record low, but the central
bank sounded an optimistic tone in a statement accompanying the
decision.
The Aussie dollar was relatively steady at $0.6968 following
the decision. AUD=D4 .
Gold held steady near an eight-year peak, changing hands at
$1784.24 per ounce.
Oil prices were mixed in line with some of the Asian
equities markets.
Brent crude LCOc1 lost 0.51% to $42.88 per barrel, while
U.S. West Texas Intermediate crude CLc1 fell 0.59% to $40.39.
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ChiNext powers ahead https://tmsnrt.rs/2V9olqm
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(Editing by Shri Navaratnam and Jacqueline Wong)