Chinese stocks, yuan rebound as next trade policy moves watched

SHANGHAI (Reuters) – Chinese stocks and the yuan CNY = CFXS rose on Monday morning despite heightened trade tensions between Washington and Beijing.

Chinese markets fell in the run-up to Friday's imposition of tariffs on $ 34 billion worth of Chinese goods, which was immediately matched by China's prices.

More retaliatory measures as promised by U.S. President Donald Trump could add to further pressure on China's capital markets, the country's foreign reserves did not shrink in June.

By 0313 GMT, the Shanghai Composite Index .SSEC, which tracks shares traded on the stock exchange, had risen about 1.6 percent, while the blue-chip CSI300 Index .CSI300 was up about 2 percent.

Stocks have tumbled about 17 percent since the beginning of the year and the success of the fundamentals.

In an online post late on Sunday, the Shanghai Stock Exchange exhorted investors to buy.

"Currently, the general level of valuations of Shanghai-listed companies is relatively low, presenting obvious value-added investment opportunities," it said.

"Indeed, several Shanghai-listed companies have disclosed plans for buy-backs for stake, by which companies and investors are adamantly confident of trading companies, profitability and growth prospects."

The yuan was trading at 6.6289 per dollar at 0314 GMT, up about 0.3 percent from its late close on Friday of 6.6489 yuan, after the weakened dollar US payroll data on Friday.

China's foreign exchange reserves rose $ 1.51 trillion in June to $ 3.112 trillion due to asset price changes, the State Administration of the Foreign Exchange (SAFE) said on Monday.

"If economic fundamentals and Sino-U.S. have no additional changes, rapid and sizable one-way depreciation of the yuan against the dollar should have come to an end. The market will have some consolidation and try to figure out a bottom for the yuan, "Lu Zhengwei, chief economist at Industrial Bank in Shanghai, wrote in a note.

"Markets in the trade between the United States and China, such as expansion in the size of tariff or deceleration."