CHINA MARKETS: Yuan Stronger; Rates Lower; Stocks Down

     BEIJING (MNI) - The yuan was stronger against the U.S. dollar on Thursday

after the People's Bank of China set the fixing rate much stronger for the day.

     The yuan was last at 6.6570 against the U.S. unit, compared with the

official closing price of 6.6636 on Wednesday.

     The PBOC set the yuan central parity rate at 6.6525, 0.16% stronger than

Wednesday's 6.6633.

     Money market rates were lower Thursday morning. The seven-day repo average

was last at 2.8293%, compared with Wednesday's average of 2.9104%. The overnight

repo average was at 2.8111%, compared with Wednesday's 2.8711%.

     The People's Bank of China skipped its open-market operations Thursday,

according to a statement on its website. The PBOC explained that it will make a

total of CNY80 billion in treasury cash deposits today to commercial banks and

that liquidity in the interbank market is at a proper level, so OMOs operations

were not necessary.

     A total of CNY100 billion in reverse repos matured on Thursday, resulting

in a CNY20 billion net drain after taking into account the treasury cash

deposits. It was the fourth consecutive day this week that the PBOC has drained

liquidity from the interbank market.

     The yield on benchmark 10-year China government bonds was last at 3.5894%,

compared with the previous close of 3.5906%.

     Stocks fell, with the ceramics and medical instrument sectors leading

losses. The benchmark Shanghai Composite Index was last down 0.06% at 3,285.63.

Hong Kong's Hang Seng Index was 0.40% higher at 27,512.43.

--MNI Beijing Bureau; +86 10 85325998; email: he.wei@marketnews.com

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