MNI CHINA MARKETS: Yuan Weaker; Rates Diverged; SH Shares Down

     BEIJING (MNI) - The yuan fell against the U.S. dollar on Friday after the

People's Bank of China (PBOC) set the fixing weaker for the day.

     The yuan was last at 6.4016 against the U.S. unit, compared with the

official closing price of 6.3933 on Thursday.

     The PBOC set the yuan central parity rate weaker at 6.4003, compared with

Thursday's 6.3919. The PBOC has set the fixing weaker for the first time after

three days of gain.

     Interbank market rates fell after the PBOC skipped open market operations

(OMOs), which resulted in a net drain of CNY40 billion.

- 7-day repo average fell to 2.6709% from yesterday's average of 2.6954%;

- Overnight repo average rose to 2.5453% from Thursday's 2.5314%.

     Yield on 10-year China Government Bond last traded 3.6575%, down from

3.6800% close on Thursday: Wind Information.

     The Shanghai Composite Index fell 1.25% to 30780.48 at the end of the

morning trading, while Hong Kong's Hang Seng Index declined 1.11% to 31,164.20.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

[TOPICS: M$A$$$,M$Q$$$,M$$FI$,MN$FI$,MN$FX$]