* Stocks notch up modest gains, holidays crimp trade
* Major currencies locked in tight ranges, gold firm on
* Data diary mostly empty, Australia central bank holds
* China yuan firms, talk of central bank intervention helps
By Wayne Cole and Vidya Ranganathan
SYDNEY, May 6 Asian share markets shuffled
higher on Tuesday after promising U.S. economic news helped Wall
Street to a firmer finish, though activity was again light with
Tokyo still on holiday.
Stock markets in India and China led the
way with gains of 0.5 percent each, while MSCI's broadest index
of Asia-Pacific shares outside Japan added 0.2
Markets in Seoul and Hong Kong are also off on Tuesday to
celebrate the Buddha's birthday.
The Australian central bank's policy meeting was the only
notable economic event in Asia, and the Reserve Bank of
Australia (RBA) kept the cash rate at a record low of 2.5
percent, just as markets had priced in.
Australia's main stock index trimmed gains while the
Australian dollar firmed a quarter of a U.S. cent after
the RBA announced its decision, and said the local currency was
high historically, but refrained from calling for it to fall.
"The RBA is trying to be desperately neutral," said Annette
Beacher, head of Asia-Pacific research at TD Securities.
"For every positive, they included a negative. They are
trying to retreat to the sidelines and the Aussie dollar doesn't
know what to do."
Despite the holiday-thinned trading, stock markets did get a
fillip after the Institute for Supply Management's U.S. services
sector index rose to 55.2 in April, the fastest pace in eight
months and easily topping forecasts. A reading above 50
The data added to evidence that the U.S. economy is emerging
from a particularly harsh winter-induced slowdown and provided a
welcome offset to worries about China.
The CSI300 index of the largest Shanghai and
Shenzhen A-share listings was up 0.6 percent, while the Shanghai
Composite Index edged 0.5 percent higher to 2,036.83
points, although gains were limited by weakness in the property
sector as investors braced for any signs of financial distress
"The U.S. is showing signs of recovering from particularly
slow momentum in Q1, driven to a significant extent by adverse
weather effects, and the euro area remains on a stable, gradual
upward trajectory," noted analysts at Barclays.
"In Japan, the sales tax hike frontloading and payback,
which began last month, were largely in line with expectations."
TIGHT FX RANGES
The better U.S. news helped Wall Street recover early
losses. The Dow closed up 0.11 percent, while the S&P 500
gained 0.19 percent and the Nasdaq 0.34 percent.
Bonds took the opposite tack with Treasuries surrendering
some of the gains made last week. Yields on 10-year paper
lurched up to 2.61 percent, having been as low as
The U.S. Treasury auctions three-, 10- and 30-year debt this
week which will be a useful litmus test of investor demand.
In currency markets, trading was subdued as holidays in
London and Tokyo sapped liquidity. The dollar index was
steady at 79.499, having drifted between 79.433 and 79.527 on
The euro stood at $1.3882, having hugged a tight
$1.3864-$1.3887 range. Against the yen, the greenback was little
changed at 102.02 as was the euro at 141.62.
China's yuan hit its strongest point in two weeks, following
talk of central bank intervention to support the currency after
it touched an 18-month low last week. Spot yuan hit
its strongest level since April 22 in early trade, changing
hands at 6.2330 at midday.
In commodities, gold traded near its highest in three
weeks at $1,308.9 an ounce, its safe-haven appeal boosted
somewhat by the simmering tensions in Ukraine.
Pro-Russian rebels shot down a Ukrainian helicopter in
fierce fighting near the eastern town of Slaviansk on Monday,
and Kiev drafted police special forces to the southwestern port
of Odessa to halt a feared spread of rebellion.
Loss of control of Odessa would be a huge economic and
political blow for Ukraine, a country the size of France that
borders several NATO countries and aspires to join the military
alliance, a primary source of concern for the Kremlin.
Oil prices extended their recent decline. Brent crude for
June delivery was off 8 cents at $107.64 a barrel, while
U.S. crude eased 2 cents to $99.46 a barrel.
(Editing by Jacqueline Wong)