HONG KONG - Chinese stocks jumped Wednesday after Hong Kong scrapped a daily limit on how much yuan residents can buy as exchanges in both economies prepare for the start of cross border share trading next week. Tokyo's Nikkei index touched a seven-year high amid speculation of a snap Japanese election that could delay a sales tax increase. Other global benchmarks were lower.
European shares slipped in early trading. Britain's FTSE 100 dropped 0.4 percent to 6,600.19 and France's CAC 40 dropped 0.7 percent to 4,212.98. Germany's DAX lost 1.1 percent to 9,264.09. U.S. stocks were set to open lower, with both Dow and S&P 500 futures slipping 0.4 percent.
The Hong Kong Monetary Authority announced it was ending the 20,000 Hong Kong dollar ($2,580) daily limit on yuan purchases by local residents. That added to investor anticipation ahead of next week's launch of the Shanghai-Hong Hong stock trading link, which promises to give local and foreign investors a bigger foothold in China's tightly controlled stock markets. HKMA Chief Executive Norman Chan said without the limit "it will be more convenient for Hong Kong residents to participate" in the trading link.
Elsewhere in Asia, investors again latched on to speculation that Japan's Prime Minister Shinzo Abe may call a snap election instead of going ahead with a planned second hike in consumption tax. Such a move would take pressure off Asia's second biggest economy in the short term. It has suffered after the government raised the consumption tax in April to help stabilize tattered public finances.
"Japanese equities have proved to be the gift that keeps on giving after recent gains," said Stan Shamu, strategist at IG Markets in Melbourne.
China's Shanghai Composite Index surged 1 percent to close at 2,494.48 after Hong Kong's de facto central bank said it was ending the currency conversion limits. Japan's benchmark Nikkei 225 closed 0.5 percent higher at 17,197.05 after rising as much as 1.4 percent. South Korea's Kospi gained 0.2 percent to 1,967.27. Markets fell in Australia, Indonesia and Taiwan, but rose in the Philippines, India and Indonesia.
The dollar slipped to 115.24 yen from 115.72 in late trading Thursday. The euro rose to $1.2473 from $1.2466.
Benchmark U.S. crude oil slipped 52 cents to $77.42 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 54 cents to close at $77.94 a barrel on Tuesday. Brent crude fell $1.29 to $81.10 on the ICE Futures exchange in London.