(Repeats to additional subscribers)
* Asian shares slide, triggered by profit-taking sales
* Yuan mid-point against dlr fixed at highest since July
2005
* Aussie, euro hit day high after yuan fixed at record high
* Oil demand perks up, U.S. crude prices rise
By Umesh Desai
HONG KONG, June 22 (Reuters) - Asian stocks reversed their
previous day's rise on Tuesday as investors took profits from a
rally spurred by China's weekend decision to give its currency
more flexibility.
China's move on the yuan had spurred demand for risky
assets on optimism that a stronger yuan would lift China's
purchasing power for foreign goods such as commodities, a boon
to the global economy given the nation's vast appetite for raw
materials.
Beijing set the mid-point for the yuan currency's daily
trading range at a 5-year high on Tuesday, which gave the
markets a brief respite from the selling but kept most
benchmark indexes in the red.
On Tuesday, the MSCI index of Asia Pacific ex-Japan stocks
<.MIAPJ0000PUS> was down 0.7 percent, hovering around the day's
lows. Losses in technology <.MIAPJIT00PUS> and resources
<.MIAPJMT00PUS> was the dominant drag on the broad market.
China's central bank set the yuan's daily mid-point
<CNY=SAEC> at 6.7980 against the dollar on Tuesday, the highest
level since the yuan's revaluation in July 2005, signalling it
could allow the yuan to rise further.
Spot yuan opened at 6.7968 against the dollar, but then
rose to as high as 6.7900 in early trade, up 0.11 percent from
the close on Monday, when it jumped 0.42 percent.
The move reignited demand for riskier currency trades, with
the Australian dollar <AUD=> and the euro <EUR=> jumping to the
day's high against the dollar.
The euro climbed as high as $1.2355, up from around $1.2320
just before the yuan's daily mid-point was announced. The euro
then slipped to trade flat on the day.
The Australian dollar rose as high as $0.8834 <AUD=D4>, up
from around $0.8765 just before the mid-point was announced.
The Australian dollar then dipped to $0.8813, up 0.6 percent on
the day.
FOREIGN BUYING HALTS
Japan's Nikkei share average <> was down only 0.6
percent after the yuan fixing, recovering from an earlier fall
of 1.1 percent.
"Investors are growing more cautious on the view that the
magnitude of the yuan's new flexibility may not be as big as
the market had earlier hoped," said Lee Sun-yeb, a market
analyst at Shinhan Investment Corporation in Seoul.
"It seems the market is taking a bit of breather following
its recent sharp gains, as it nears the earlier high. Foreign
buying has also halted."
The Korea Composite Stock Price Index <> (KOSPI) fell
0.6 percent as foreigners dumped shares amid growing risk
aversion. Foreign investors were sellers of a net 13.6 billion
won ($11.57 million) worth of shares, poised to snap their
seven-session buying streak.
Oil prices perked up after the yuan mid-point setting, with
U.S. crude <CLc1> erasing losses to move into positive
territory.
China's stock market, one of the world's worst performers
this year, was lower after the previous day's surge. The
Shanghai Composite Index <> was off 0.2 percent, after
rising 2.9 percent on Monday to its highest close in 3 weeks.
[]
And analysts expect more volatility ahead as the central
bank's move comes a day after it kept the mid-point unchanged.
"The authorities want to say they are showing a more hands
off approach and more flexibility in the markets but the
reality is they are introducing more intraday volatility in the
market," said Craig Chan, senior fx strategist at Nomura
International.
(Additional reporting by Saikat Chatterjee in Hong Kong and
Jungyoun Park in Seoul; Editing by Alex Richardson)
