Daily Chinese yuan and money market update

SHANGHAI, July 3 (Reuters) - Following is a summary of market
activity and news articles on Thursday relating to the yuan and
China's money market.

DLR/CNY EUR/CNY YEN/CNY* 1-YR NDF** 1-YR VOLS**
Close 6.8510 10.8775 6.4485 6.5030 7.00/7.25 pct
Mid-point 6.8529 10.8814 6.4656***
Pvs close 6.8530 10.8298 6.4420 6.4840 7.05/7.45 pct

Sources: <CNYX=CFXS>, <CNYNDFOR=>, CNYVOL

* Yuan per 100 yen.

** Offshore NDF/VOLS figures as at 0930 GMT, compared with
levels around the same time in the previous session.

*** The mid-point is a benchmark set by the central bank. The
yuan may rise or fall 0.5 percent from its mid-point versus the
dollar each day and 3.0 percent for non-dollar currencies.

MONEY AND BOND MARKET

7-day repo 90-day PBOC bill 1-yr treasury bond

<CN7DRP=CFXS> <CN3MNFIX=R> <CN1YTFIX=R>
July 3 2.9004 3.5807 3.5623
Change on day -0.2595 0.0030 -0.0009
Change on mth -0.2149 0.0587 0.2490

** Change in weighted average and percentage point(s).

Please double-click on CNFIXINDEX for a full list of
Chinese fixed-income reference rates.

WEEKLY COLUMN

** China Money: C.bank may resort to special bills

SHANGHAI - China's central bank is having increasing
difficulty draining funds from the money market without
destabilising the market -- suggesting it may resort to selling
special bills to individual banks.

Full story: [ID:nSHA303488]

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OPEN MARKET ACTICITY

** China central bank drains 13 bln yuan via repos

SHANGHAI - China's central bank is draining 13 billion yuan
($1.9 billion) from the money market on Thursday through 28-day
bond repurchase agreements, traders said.

Full story: [ID:nSHA353495]

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** China c.bank 3-month bill yield flat at auction

SHANGHAI - China's central bank auctioned 23 billion yuan
($3.4 billion) of three-month bills in its regular open market
operations on Thursday at a yield of 3.3978 percent, traders
said, in line with market expectations.

Full story: [ID:nSHA290916]

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MARKET NEWS

** Yuan falls vs dollar in NDFs on capital controls

SHANGHAI - China's yuan fell against the dollar in the
offshore non-deliverable forwards market on Thursday, despite
global dollar weakness, after Beijing announced fresh steps to
tighten capital controls.

Full story: [ID:nSHA269612]

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** China stocks hold chart support, end up 2 pct

SHANGHAI - China's main stock index climbed nearly 2 percent
and turnover expanded to a two-week high on Thursday as the
market bounced from near major chart support.

Full story: [ID:nSHA328181]

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** China bond curve steepens as c.bank reduces drain

SHANGHAI - China's bill and bond curves steepened on Thursday
because of improving money market liquidity, pushing repo rates
down sharply.

Full story: [ID:nSHA354730]

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POLICY NEWS

** U.S. warns of resistance in China to market reforms

BEIJING - China must make a stand against the opponents of
reform and allow market forces to play a greater role in setting
prices, including the yuan's exchange rate, a senior U.S.
official said on Thursday.

Full story: [ID:nPEK356170]

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** China should cut tax to fight inflation

BEIJING - China should give tax cuts a try in fighting
inflation because its monetary tightening has proved ineffective
and costly, a statistics official said in comments published on
Thursday.

Full story: [ID:nPEK353499]

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** China tightens capital controls to thwart hot money

BEIJING - China on Wednesday tightened the administration of
its capital controls in a move aimed at deterring speculative
inflows of foreign currency betting that the yuan will keep
rising.

Full story: [ID:nPEK338718]

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** China faces tough task to make capital curbs bite

BEIJING - Beijing's latest drive to stamp out unauthorised
capital inflows is likely to be no match for resourceful
speculators determined to bring money into China to catch the
wave of a rising yuan, bankers and officials say.

Full story: [ID:nPEK347395]

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ECONOMIC NEWS

** China raises cargo train charges

BEIJING - China has increased charges on cargo train
transport to cope with rising fuel prices, the National
Development and Reform Commission said on Wednesday.

Full story: [ID:nPEK337419]

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CORPORATE NEWS

** Sinopec refining losses to stay after price hike

BEIJING - Qilu, the best-performing of all the refineries run
by Sinopec (0386.HK: Quote, Profile, Research) in the first five months of this year, may
lose around 800 yuan ($116.8) for each tonne of crude it
processes in July, an industry source said on Thursday.

Full story: [ID:nPEK350704]

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** Ping An Insurance denies talk of tax audit snags

SHANGHAI, July 3 (Reuters) - Ping An Insurance (Group) Co of
China (2318.HK: Quote, Profile, Research) (601318.SS: Quote, Profile, Research) on Thursday denied rumours that it
was facing problems related to a tax audit, after its shares in
both Hong Kong and Shanghai tumbled 10 percent the previous day.

Full story: [ID:nSHA343105]

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To see a guide on contributions, please click <CN/CONT1>.
(Compiled by Shanghai Newsroom; Editing by Edmund Klamann)