* China's CSI 300 index jumps 3%
* S&P 500 futures creep higher despite stimulus doubts
* FTSE 100, Sterling wobbly ahead of Brexit summit later
this week
* USD/CNH leaps after PBOC tweaks FX policy
By Thyagaraju Adinarayan and Tom Westbrook
LONDON/SINGAPORE, Oct 12 (Reuters) - Global stocks hit
five-week highs on Monday led by China's post-holiday surge as
investors bet on a steady recovery for the world's no. 2
economy, but worries about rising COVID-19 infections capped
gains in Europe and the United States.
European countries were considering adding fresh travel
curbs due to rising coronavirus, a contrast to Asia-Pacific
countries including Singapore, Australia and Japan, where a
gradual easing of some international travel restrictions was
under way. Still, U.S. and European markets were a tad higher as
investors hoped for coronavirus aid in the United States, with
the Trump administration on Sunday calling on Congress to pass a
stripped-down relief bill. European stocks .STOXX and U.S. stock futures EScv1 rose
0.2%. FTSE 100 .FTSE and sterling meanwhile were wobbly ahead
of a Brexit summit later in the week.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 1% to 2-1/2-year highs, buoyed by a 3% gain
in Chinese blue chips .CSI300 and a 2.2% rise by Hong Kong's
Hang Seng index .HSI .
China has returned from an eight-day Mid-Autumn festival
with investors encouraged by a robust rebound in tourism and
ebbing coronavirus cases. "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."
Chinese stocks were also boosted by rising chances of Joe
Biden's victory in the U.S. presidential election -- an
administration seen less likely to incline toward tariffs and
trade disputes.
Chinese blue chips have gained 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. "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."
U.S. markets are also gearing up for the earnings season.
Major Wall Street banks including JPMorgan JPM.N , Citi C.N
and Bank of America BAC.N poised to report later this week.
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. 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 6.7115 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 $1.1819 and the yen
JPY= firmed to 105.54 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.
O/R
Gold XAU= held steep Friday gains at $1,929 an ounce as
investors stuck with bets that U.S. stimulus would eventually
arrive and drive inflation to the benefit of bullion. GOL/
The U.S. bond market is closed on Monday for Columbus Day.
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