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U.S. markets rebound after China moves to strengthen yuan

By
Clyde Hughes
Chinese soldiers march past the People's Bank of China, the country's central bank responsible for carrying out monetary policy and regulation of financial institutions, in Beijing on Tuesday. The Dow fell more than 700 points at one point Monday in trading that was seriously influenced by the ongoing trade conflict with China. Photo by Stephen Shaver/UPI
Chinese soldiers march past the People's Bank of China, the country's central bank responsible for carrying out monetary policy and regulation of financial institutions, in Beijing on Tuesday. The Dow fell more than 700 points at one point Monday in trading that was seriously influenced by the ongoing trade conflict with China. Photo by Stephen Shaver/UPI | License Photo

Aug. 6 (UPI) -- U.S. markets rebounded a bit Tuesday, restoring some of the losses a day after its worst-performing session of the year that most analysts linked to the ongoing U.S.-China trade conflict.

By 2 p.m. EDT, the Dow Jones Industrial Average had gained back nearly 200 points. The top U.S. index lost more than 700 points at times during trading Monday. The S&P 500 was up more than 20 points and the Nasdaq had regained 77.

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Asian markets didn't rebound nearly so well Tuesday. Japan's Nikkei 225 shed 135 points, Seoul's Kospi lost nearly 30, Hong Kong's Hang Seng Index fell 175 points and China's CSI300 Index lost almost 40.

Experts say the turmoil was spurred by volatility Monday influenced by two chief factors -- the Trump administration declaring Beijing a currency manipulator and the Chinese yuan slipping to its lowest value in 11 years. The People's Bank of China moved to strengthen the yuan on Tuesday.

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"Going forward, stabilization in the U.S.-China trade war is now the most important key to broader market stabilization," analyst Tom Essaye said in a note to clients.

"If the escalation continues, that will cause a further pull-back, regardless of what the [Federal Reserve] is going to do."

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China's central bank on Tuesday condemned the U.S. move to label the country a currency manipulator as "arbitrary, unilateral and protectionist." It said the declaration, the United States' first in a quarter-century, "seriously damages international rules and will significantly impact the global economy and financial markets."

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The central bank called on the United States to pull back before it is too late and return to a "rational and fair track."

U.S. President Donald Trump said Beijing intentionally allowed the value of the yuan to drop so American products become more expensive in China.

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