Yuan strengthens on bets Europe will tackle debt crisis

China's yuan gained on speculation the European Central Bank will soon act to ease the region's debt crisis, spurring demand for emerging-market assets.

The nation's overseas sales climbed 1 percent in July from a year earlier, following an 11.3 percent increase in June, data showed last week. German Chancellor Angela Merkel ends her summer vacation and travels to Canada this week for talks with Prime Minister Stephen Harper, while a report on Tuesday may show the euro region's economy contracted in the second quarter.

"Risk appetite is improving on hopes that the ECB will eventually take some actions," said Tommy Ong, a Hong Kong-based senior vice-president of treasury and markets at DBS Bank (Hong Kong) Ltd. "That helped revive investment demand for the yuan. However, trade-related demand will remain weak as export growth is slowing."

China Daily - Agencies