TOKYO: Chinese shares rose sharply on Wednesday, with traders citing talks that China's central bank may ease policy to boost growth after the country's exports fell for the first time in 17 months. European shares were expected to open steady, with Britain's FTSE 100 seen down as much as 0.1 per cent and Germany's DAX up as much as 0.2 per cent. US stock futures suggested a flat opening for Wall Street. China's exports fell 3.1 per cent in June from a year earlier, while imports dropped 0.7 per cent, severely missing market expectations and reinforcing signs of a second-quarter economic slowdown in the world's second-largest economy. Beijing also warned of a "grim" outlook for trade. The downbeat data follow Beijing's crackdown on the use of fake export documents to close a loophole for short-term money inflows that had exaggerated China's export performance. "The surprisingly weak June exports show China's economy is facing increasing downward pressure on lacklustre external demand. Exports are facing challenges in the second half of this year," said Li Huiyong, economist at Shenyin & Wanguo Securities in Shanghai. China's CSI300 index gained 2.2 per cent, however, on the easing talk. The index has been battered recently as Beijing tried to bring risky lending under control. At one point, it had fallen as much as 24 per cent from a near three-month peak touched on May 29, and is down nearly 13 per cent this year. MSCI Asia-Pacific ex-Japan index was up 0.7 per cent after gaining as much as 1.2 per cent to a one-week high before the Chinese data. Earlier, Asian shares were buoyed by Wall Street's gains on optimism for US company earnings. Assets in Australia, seen as a proxy of China's growth, were also hit after the data. The Australian dollar fell to a session low of $0.9125 before stabilsing at $0.9192, and the country's S&P/ASX 200 index also pared gains. Copper prices reversed early losses incurred after the trade data from China, a top consumer of raw materials, as Chinese stocks moved higher. They added 0.5 per cent to above $6,700 a tonne, while gold put on 0.2 per cent, extending Tuesday's 1.1 per cent rise. Brent crude prices were steady at just below $108 a barrel after rising 0.6 per cent in the previous session on concerns that violence in Egypt could ignite conflict in the Middle East. YEN GAINS But concerns over China pulled the dollar further from a three-year high against a basket of major currencies touched on Tuesday. It was last down 0.1 per cent after rising as high as 0.2 per cent. The dollar also fell 0.6 per cent to 100.52 yen, which weighed on Tokyo's Nikkei average, down 0.4 per cent. Investors have been betting on further dollar gains as the US Federal Reserve prepares to scale back its $85 billion a month stimulus programme. The US central bank is to release its minutes of the June policy meeting later in the day, plus Fed Chairman Ben Bernanke is to speak on Wednesday.

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