China's yuan fell against the U.S. dollar for the third straight session late Wednesday due to a sharply higher dollar-yuan central parity rate, but the decline was limited by banks' demand for the local currency.
On the over-the-counter market, the dollar was at CNY6.6543 around 0930 GMT, up from Tuesday's close of CNY6.6447. It traded between CNY6.6477 and CNY6.6551.
The People's Bank of China set the dollar-yuan central parity rate at 6.6589, sharply higher than Tuesday's level of 6.6469, after the U.S. currency surged against other major currencies overnight following the exchange of fire between North Korea and South Korea. The incident, coupled with lingering concerns over the eurozone sovereign debt crisis, sent investors to the dollar, which is considered a safe-harbor currency.
'The main theme today is risk aversion, with the dollar sustaining most of last night's gains against the euro,' a Shenzhen-based trader said.
The ICE Dollar Index, which tracks the U.S. dollar against a trade-weighted basket of currencies, rose to 79.694 late Tuesday in New York from 78.645 late Monday. At 0930 GMT, the dollar index was at 79.871.
However, the yuan benefited from banks' buying of the local currency on behalf of clients in afternoon trade, which helped the local currency rise from its intraday low of 6.6551 against the dollar, traders said.
Despite the yuan's weakness in recent sessions, traders said they expect the PBOC to guide the yuan higher against the dollar before year-end amid high inflationary pressure in the Chinese economy.
'The PBOC will likely let the yuan appreciate at the right time, such as if there is another interest rate hike or the eurozone sovereign debt crisis worsens,' said a Beijing-based trader at a local bank.
Offshore, one-year dollar-yuan nondeliverable forwards rose to 6.5090/6.5130 from 6.4970/6.5040 late Tuesday

Hong Kong shares ended lower Friday, reversing early gains to track declines on China's stock markets amid increasing concerns over tensions on the Korean peninsula.

The Hang Seng Index fell 177.43 points, or 0.8%, to 22,877.25 after trading between 22,782.98 and 23,107.67. The index fell 3.1% over the week.

Market volume totaled HK$66.31 billion, down from HK$74.44 billion Thursday.

Analysts said they expect the blue-chip index to trade in a narrow range between 22,800 and 23,500 in the near term with volumes likely to stay low, as investors stay on the sidelines because of concerns about fund outflows from the Asia-Pacific region due to the unrest on the Korean peninsula.

'Investors are taking a wait-and-see attitude. With market activity low because of the U.S. Thanksgiving holiday, coupled with the Hang Seng Index futures expiry on Monday, I can't see a breakthrough for the bourse in the next few sessions,' said Conita Hung, a director at Delta Asia Financial Group.

Explosions were heard Friday afternoon on South Korea's Yeonpyeong Island, with smoke visible on the coast of North Korea, three days after a North Korean artillery barrage killed four people on the remote South Korean island.

While it was unclear whether the booming sounds were the result of artillery fire, the increased geopolitical risks overshadowed Asian markets. China's benchmark Shanghai Composite Index fell 0.9% to 2,871.70 and Tokyo's Nikkei Average ended down 0.4% at 10,039.56.

Analysts said concerns are also growing the Chinese government will announce more tightening measures to curb inflation, putting pressure on Chinese financial firms, which led the day's blue-chip declines.

Among Chinese banks, ICBC fell 1.8% to HK$5.92, China Construction Bank dropped 1.3% to HK$6.96, and Bank of China ended down 1.0% at HK$4.12.

Local developers continued their correction following the government's new property cooling measures announced Friday last week. The measures led to a sharp drop in property transactions this week, analysts said.

Hang Lung Properties fell 0.9% to HK$34.70, and Cheung Kong Holdings slid 0.9% to HK$114.80.

Still, analysts were generally positive about the long-term outlook for the city's stock market. As the index corrects amid various regional political concerns, now is a good time to buy, said Peter Lai, a director at DBS Vickers.

'The ample liquidity that is shying away from the real-estate market (due to the new measures) needs another channel to invest in,' said Lai.

On its stock market debut Friday, dairy firm China Modern Dairy fell 13% to HK$2.51 from its initial public offering price of HK$2.89, after the retail portion of the offering was just three times oversubscribed.

'Raw milk is the only revenue source for Modern Dairy. The outbreak of any major diseases among cows or product contamination could materially affect its business,' BEA Securities said in a note Friday.

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Fueled by series of positive and negative news, including concern of Europe sovereign debt crisis spread to Spain, tension at Korea as well as the lack of new tightening measures launched by China, most investors preferred to keep sideline. HK stock traded within narrow range on Monday. However, buying interest emerged in the late session with the Hang Seng Index rose 289 point to 23,166 and H share index added 131 points to 12,888. Market turnover is thin which is at HK$65.2bn. China does not extend its tax exemption on foreign companies, JV car manufacturers were hard hit with GAC(2238.HK) and Dongfeng (0489.HK) rising 8.2% and 5.3% each. On the other hand, encouraged by positive view released by its management, Anta(2020.HK) rose 8.0%.

Hong Kong shares ended lower Tuesday, tracking the decline in China shares amid growing concerns about further policy tightening on the mainland, with Chinese financial firms and property stocks leading the fall.

The blue-chip Hang Seng Index fell 158.23 points, or 0.68%, to 23,007.99 after trading between 22,844.53 and 23,199.44. The index fell 0.4% in November.

Market volume totaled HK$101.01 billion, up from HK$65.18 billion Monday.

Analysts said concerns about the health of the economic recovery in Europe and the possibility Beijing may introduce further tightening measures are likely to weigh on the local share market in the near term.

Linus Yip, strategist at First Shanghai, said he expects the index to find strong support 22,690 in the near term, despite the uncertainty about further tightening measures in China.

'China tightening concerns, together with Korean and Europe debt worries will continue to weigh on trading sentiment, but I believe window-dressing activities ahead of the end of the year will limit further losses in Hong Kong

Chinese power producer Datang International Power Generation Co. (0991.HK) said Tuesday the China Securities Regulatory Commission approved its planned private placement of Shanghai-listed A shares.

The company didn't specify when the private placement will take place.

In May, the power producer said it planned to raise up to CNY8 billion through a private placement by selling a maximum of 1 billion A shares at no less than CNY6.81 per share to fund several coal-based gas projects and power plants.