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Stocks Advance Yuan Slides to Lowest in a Year

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Stocks in Asia climbed Tuesday on further signs of a shift by China toward monetary expansion and as rising yields boosted financial shares. The yuan tumbled to the lowest against the dollar in more than a year.

Equities gained across the region, with the steepest advances among Chinese stocks after the government unveiled a package of measures to boost domestic demand amid simmering trade tensions. The yuan slid as much as 0.6 percent a day after a record injection of funding for banks. China’s benchmark 10-year bond yield jumped to a four-week high.

Financial stocks as a group were among the biggest gainers on the MSCI Asia Pacific Index on rising bond yields and European equity futures gained in early London trading. Ten-year Treasury yields held around the highest in more than a month after speculation arose that the Bank of Japan may consider fine-tuning its stimulus programs — reminding traders that the direction of major central banks is toward rolling back quantitative easing.

The slide in the yuan has renewed investor focus on the role the currency could play in the country’s ongoing trade tensions with Washington. A Chinese Foreign Ministry spokesman said Monday the yuan is “determined by the market,” after the Trump administration criticized the recent weakening in the exchange rate.

“We think it’s counterproductive for China and others to try and use currency actively as a tool in a trade war,” Johan Jooste, chief investment officer at Bank of Singapore, said in a Bloomberg Television interview. “In the short run, they are probably quite happy to allow some depreciation to occur — it might soften the blow — but longer term what you will have is a series of competitive devaluations and you are back to where you started.”

Elsehwere, Google parent Alphabet — a target of European regulators’ ire — saw its shares climb in after-market trading, after reporting rising revenue from advertising. Crude oil held below $68 a barrel in New York and gold declined.

Earnings season continues with the following tech companies among those reporting: Facebook, AT&T, Amazon.com, Twitter, Advanced Micro Devices, Qualcomm and Intel. They are joined by global financial giants Deutsche Bank, UBS, Nomura and Visa. Others include Halliburton, Michelin, Boeing, Lockheed, Nissan and Shell.

These are the main moves in markets:

Stocks

Japan’s Topix index was up 0.5 percent at the 3 p.m. close in Tokyo.

Australia’s S&P/ASX 200 Index climbed 0.6 percent.

Hong Kong’s Hang Seng Index rose 1.4 percent.

The Shanghai Composite Index added 1.4 percent.

South Korea’s Kospi Index gained 0.5 percent.

S&P 500 Index futures ticked up 0.2 percent.

Futures on the FTSE 100 Index gained 0.4 percent as of 7:07 a.m. in London.

The MSCI Asia Pacific Index gained 0.5 percent.

Currencies

The Japanese yen was flat at 111.35 per dollar.

The offshore yuan fell 0.5 percent to 6.8376 per dollar.

The euro traded at $1.1676.

Bloomberg Dollar Spot Index was up 0.1 percent.

Bonds

The yield on 10-year Treasuries held at 2.95 percent after the biggest two-day jump since February.

Australian 10-year government bond yields rose about 4 basis points, to 2.71 percent.

China’s 10-year bond yield rose about 5 basis points to 3.57 percent.

Commodities

West Texas Intermediate crude lost 0.3 percent to $67.74 a barrel.

Gold fell 0.4 percent to $1,219.10 an ounce.

Source: Bloomberg