* China shares jump, lifting Asian shares and copper prices
* China warns of "grim" trade outlook
* Euro stabilises after sliding to 3-month low vs dollar
* European markets expected to open steady
* Dollar slips from 3-year high vs basket of currencies
By Dominic Lau
TOKYO, July 10 (Reuters) - Chinese shares rose sharply on
Wednesday, with traders citing talks that China's central bank
may ease policy to boost growth after the country's exports fell
for the first time in 17 months.
European shares were expected to open steady, with Britain's
FTSE 100 seen down as much as 0.1 percent and Germany's
DAX up as much as 0.2 percent. U.S. stock futures
suggested a flat opening for Wall Street.
China's exports fell 3.1 percent in June from a year
earlier, while imports dropped 0.7 percent, severely missing
market expectations and reinforcing signs of a second-quarter
economic slowdown in the world's second-largest economy. Beijing
also warned of a "grim" outlook for trade.
The downbeat data follow Beijing's crackdown on the use of
fake export documents to close a loophole for short-term money
inflows that had exaggerated China's export performance.
"The surprisingly weak June exports show China's economy is
facing increasing downward pressure on lacklustre external
demand. Exports are facing challenges in the second half of this
year," said Li Huiyong, economist at Shenyin & Wanguo Securities
China's CSI300 index gained 2.2 percent, however,
on the easing talk.
The index has been battered recently as Beijing tried to
bring risky lending under control. At one point, it had fallen
as much as 24 percent from a near three-month peak touched on
May 29, and is down nearly 13 percent this year.
MSCI Asia-Pacific ex-Japan index was up 0.7
percent after gaining as much as 1.2 percent to a one-week high
before the Chinese data. Earlier, Asian shares were buoyed by
Wall Street's gains on optimism for U.S. company earnings.
Assets in Australia, seen as a proxy of China's growth, were
also hit after the data. The Australian dollar fell to
a session low of $0.9125 before stabilsing at $0.9192, and the
country's S&P/ASX 200 index also pared gains.
Copper prices reversed early losses incurred after
the trade data from China, a top consumer of raw materials, as
Chinese stocks moved higher. They added 0.5 percent to above
$6,700 a tonne, while gold put on 0.2 percent, extending
Tuesday's 1.1 percent rise.
Brent crude prices were steady at just below $108 a
barrel after rising 0.6 percent in the previous session on
concerns that violence in Egypt could ignite conflict in the
But concerns over China pulled the dollar further
from a three-year high against a basket of major currencies
touched on Tuesday. It was last down 0.1 percent after rising as
high as 0.2 percent.
The dollar also fell 0.6 percent to 100.52 yen, which
weighed on Tokyo's Nikkei average, down 0.4 percent.
Investors have been betting on further dollar gains as the
U.S. Federal Reserve prepares to scale back its $85 billion a
month stimulus programme. The U.S. central bank is to release
its minutes of the June policy meeting later in the day, plus
Fed Chairman Ben Bernanke is to speak on Wednesday.
"Dollar buying will continue. With rising Treasury yields,
there is no incentive to sell the dollar, particularly against
the euro," said Masashi Murata, senior currency strategist at
Brown Brothers Harriman in Tokyo.
But Murata added, "any evidence of a slowdown in China will
prompt some people to buy back the yen."
The euro steadied at $1.2793 after sliding to a
three-month low of $1.2755 after ratings agency Standard &
Poor's cut Italy's debt rating by one notch to BBB, the second
lowest of the investment grade status, and left its outlook on
negative, citing concerns about prospects for the Italian
The downgrade, which moved in line with rival Moody's, came
a day before Italy was due to sell 9.5 billion euros of Treasury
bills and two days before a planned sale of up to 6.5 billion
euros of medium- and long-term bonds.
Also weighing on the common currency were comments by
European Central Bank policymaker Joerg Asmussen, who said the
central bank's guidance on interest rates staying at record lows
extends beyond 12 months.
The ECB later issued a statement saying Asmussen had not
intended to give any guidance on the exact length of time for
which it expects to keep rates at record lows.
Sterling was up 0.1 percent at $1.4883 after
sliding to a three-year low of $1.4814 in the previous session
on weak factory output and trade data, seen as raising the risk
of the Bank of England easing monetary policy in the coming