GLOBAL MARKETS-Stocks creep higher on U.S. stimulus hopes, yuan sinks

* ASX opens 0.1% higher, futures suggest steady open in Asia
* USD/CNH leaps 0.7% after PBOC tweaks FX policy
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Tom Westbrook
SINGAPORE, Oct 12 (Reuters) - Asian stock markets began the
week with cautious gains on Monday, as investors clung to hopes
for U.S. stimulus spending, while the dollar firmed after a
Chinese central bank policy tweak unwound some of the yuan's
steep gains.
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, which traders said suggested
authorities were discomfited by recent gains. The yuan CNH= fell 0.7% to 6.7331 in early trade, pulling
the Australian dollar 0.2% lower to $0.7229. The fixing of the
onshore trading band at 0115 GMT will be closely watched as a
guide to authorities' stance on the currency's level. FRX/
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS edged up 0.1% in early trade. Australia's
S&P/ASX 200 .AXJO was 0.1% higher and New Zealand's NZ50
.NZ50 crept up to a record peak. Japan's Nikkei .N225
slipped 0.3%.
The Trump administration on Sunday called on Congress to
pass a stripped-down coronavirus relief bill, as talks on a more
comprehensive plan were again at an impasse. A new $1.8 billion White House proposal has drawn criticism
from both Democrats and Republicans, yet investors seem
optimistic that spending will resume at some point.
"Markets still have high hopes of a large scale stimulus
package, and are indifferent about whether it occurs this side
of November or not," said National Australia Bank economist
Tapas Strickland.
Polls showing Democrat Joe Biden leading Donald Trump in the
U.S. presidential race partly underpin that confidence,
Strickland said, since the Democrats are pushing harder for
spending.
"Markets should be very sensitive to Senate polling over the
coming weeks, given still-high expectations for a large scale
U.S. stimulus package, which to some extent if not passed before
November is contingent on the Democrats flipping the Senate."
Biden's poll lead had also helped drive surging yuan gains
on Friday, when Chinese markets re-opened after the Mid-Autumn
break and currency jumped more than 1% in onshore trade.
Investors figured Biden would be less likely to trigger
fresh Sino-U.S. trade disputes. The yuan is up 7.2% since late
May as China's economy has led the world's coronavirus recovery.
However, Saturday's move from the PBOC to cut forward
reserve requirements, making it cheaper to short the yuan or to
hedge against a rise, hints further gains could be tempered.
"The authorities have not stood in the way of yuan strength,
but this move could be seen as a sign that they want to slow the
pace of appreciation," said ANZ Bank's head of Asia research,
Khoon Goh.
"We still see scope for further yuan appreciation,
especially with China's strong growth momentum...but the
authorities want to encourage more two-way flows, and removing
the reserve requirement will help."
Other currency moves were modest, with early dollar weakness
paring a bit. The euro EUR= edged 0.1% lower to $1.1819 and
the yen JPY= was broadly steady at 105.64 per dollar. The kiwi
NZD=D3 dipped 0.1% with the softer yuan to sit at $0.6666.
In commodity markets, oil prices were back under pressure
after a ten-day oilworkers strike in Norway was resolved late
last week, likely boosting production. O/R
Brent crude futures LCOc1 slipped more than 1% to $42.28 a
barrel and U.S. crude futures were down about 1.4% at $40.04.
Gold XAU= held steep Friday gains at $1,930 an ounce as
investors stuck with bets that U.S. stimulus would drive
inflation to the benefit of bullion.
The U.S. bond market is closed on Monday for Columbus Day.