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Nikkei Markets

Asian stocks gain on stronger-than-expected yuan reference rate, China data

A300 index rises after six-day losing streak

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan ended a six-day losing run on Thursday amid a stronger-than-expected yuan daily reference rate set by the Chinese central bank and better-than-expected China trade data.

The Nikkei Asia300 Index of companies outside Japan advanced 0.9% to 1,229.64 after having fallen by almost 7% in the previous six sessions.

Regional equities and currencies received a boost after the People's Bank of China set the yuan daily reference rate at 7.0039 to a dollar, stronger than the 7.0205 estimated by analysts polled by Reuters. It was the first time in more than 10 years that the Chinese central bank had set the yuan reference rate below 7 to a dollar.

Risk appetite in Asia has been a function of moves on the yuan in recent days after the Chinese currency tumbled below 7 to the dollar earlier this week for the first time in more than a decade. The fall in the currency prompted the U.S. to label China a currency manipulator, raising concerns the ongoing trade conflict between them could worsen.

"The yuan fixing has been a significant market driver this week, and so far the market's worst fears have been averted as the PBoC is not allowing the yuan to weaken wantonly," said Stephen Innes, a managing partner at Singapore-based VM Markets.

Meanwhile, China earlier Thursday reported that exports in dollar terms rose 3.3% in July from a year earlier, compared with expectations for a 2% fall. Imports declined 5.6%, less than the 8.3% fall predicted by analysts.

"Shipments in and out of China held up better than expected last month, but a sustained turnaround still looks unlikely in the near-term," Capital Economics said in a note. "Looking ahead, exports still look set to remain under pressure in the coming quarters as any prop from a weaker renminbi should be overshadowed by further U.S. tariffs and broader external weakness."

Earlier on Thursday, the Philippine central bank became the fourth monetary authority in the Asia Pacific region to ease interest rates in the last two days. The Bangko Sentral ng Pilipinas cut the key interest rate by 25 basis points, a day after the central banks in New Zealand, India, and Thailand reduced their benchmark rate.

In movers on the A300 on Thursday, HCL Technologies jumped 6.4% after the Indian software exporter's June quarter revenue in constant currency terms exceeded expectations. Its net profit in the quarter declined 8.2% from a year earlier.

KT&G advanced 1.3% after South Korea's leading tobacco company reportedly posted a 26% increase in April-June operating profit.

Index heavyweights Taiwan Semiconductor Manufacturing rose 2.2% and Tencent Holdings climbed 1.1%.

Swire Pacific advanced 3%. The Hong Kong-listed diversified conglomerate on Thursday said its net profit for the first half of 2019 fell 41%, dragged by lower valuation gains on its investment properties.

Singapore developer City Developments declined 0.9% after its net profit in the June quarter fell 26.4% from the year-earlier period. Singapore Telecommunications slipped 0.9% after posting a 35% fall in the first quarter net profit amid losses at India's Bharti Airtel and higher depreciation and amortization costs.

Tata Steel declined 3.8% after the company said April-June net profit tumbled 64% from a year earlier.

China Mobile edged 0.2% lower after reporting a 15% drop in the first-half profit.

--Nimesh Vora

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