HONG KONG - A G20 statement at the weekend promising to cut deficits, boost growth and stabilize the markets had little effect on Asian stocks Monday, while China set the yuan at its strongest level in years.
Leaders of the world's 20 leading economies finished a two-day meeting in Toronto with an official announcement committing advanced economies to at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016.
The joint statement warned that "failure to implement consolidation where necessary would undermine confidence and hamper growth."
However it was thick with caveats, with many analysts saying it was not rigid enough.
Mizuho Corporate Bank market economist Daisuke Karakama said: "They achieved the goal of being neutral to markets?it's a statement of little meaning."
In the first day's trade after the summit Hong Kong was 0.41 percent higher, Singapore added 0.31 percent and Seoul was up 0.21 percent.
But Tokyo's Nikkei fell 0.58 percent, Sydney was 0.77 percent off and Shanghai gave up two percent.
Despite the agreement the weekend showed differences on the way forward, Cityindex Head of Dealing, Michael McCarthy told Dow Jones Newswires in Sydney.
"Clearly the US wants the fiscal stimulus to remain in place for some time, but the Europeans say they can't afford to keep borrowing and spending, so there's a divergence there and there are concerns that this could lead to ructions globally," he said.
China on Monday set the central parity rate?the centre point of the currency's allowed trading band?at 6.7890 to the dollar, a fraction of a percent stronger than Friday's 6.7896.
The figure is the highest the yuan has been against the greenback since 2005, when China unpegged the currency and moved to a tightly managed floating exchange rate.
The move came after US President Barack Obama said in Toronto he expected China to fulfill last week's promise to allow yuan flexibility, which critics claim is 40 percent undervalued, giving Chinese exports a trade advantage.
"My expectation is that they're going to be serious about the policy that they themselves have announced," Obama said after the summit Sunday.
Brazilian Finance Minister Guido Mantega also urged China to let the yuan strengthen quicker.
US lawmakers have threatened to pass legislation they said would treat "currency manipulation" as an illegal subsidy and enable them to impose tariffs on Chinese goods.
The People's Bank of China last weekend said it would allow the yuan to be more flexible as it tried to head off expected pressure from other nations at the G20 summit to strengthen the unit.
In other currency trading, the euro was at 1.2380 dollars in Tokyo, flat from New York late Friday, while edging up to 110.70 yen from 110.57 yen.
The dollar was trading at 89.34 yen, up from 89.20 yen in New York.
Markets were given no help from New York, where the Dow edged lower after the Commerce Department said Friday that gross domestic product rose 2.7 percent in the March quarter, down from a previous estimate of 3.2 percent.
Oil was higher. New York's main contract light sweet crude for August delivery rose 40 cents to 79.26 dollars a barrel and Brent North Sea crude for August delivery was up 48 cents to 78.60 dollars.
Gold opened at 1,256.50-1,257.50 US dollars an ounce in Hong Kong, up from Friday's close of 1,246.00-1,247.00 dollars.
