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Asia stocks consolidate recent gains; China shines

´╗┐Asian stocks held ground on Tuesday though Chinese equities surged to a fresh 2-1/2 month high as domestic funds piled into financial counters on expectations the world's second biggest economy may have turned a corner. MSCI's broadest index of Asia-Pacific shares outside Japan . MIAPJ0000PUS was up 0.2 percent on Tuesday and held below a 19-month peak hit last Thursday. The index is up more than 11 percent since Dec. 23, which marked the trough in a selloff triggered by Donald Trump's surprise win at the U.S. election in November. With U.S. markets closed for the Presidents Holiday on Monday, Asian markets have had few global cues off which to trade. European markets are broadly expected to follow in Asia's wake and seen drifting in a narrow band. Chinese stocks led regional gainers with mainland indexes extending a nearly 7 percent rise over the last month thanks to an influx of fresh funds from domestic institutional investors and a brightening outlook for the domestic economy."We upgraded our China equities call last month because of the strong economic data and comments coming out from the new U.S. administration pointing to a softer stance toward China," said Francis Cheung, head of China-Hong Kong strategy at CLSA. China's blue-chip index . CSI300 clocked its best day in six months on Monday on reports pension funds will begin pumping in funds into the country's stock markets. Meanwhile, turnover in Hong Kong shares has jumped noticeably in recent weeks. Despite the bounce in mainland stocks, valuations remained broadly middle of the pack in Asia with price-to-earnings multiples for Chinese stocks at 19.7, far below Australia's and India's at 25 and 23, respectively. Some investors such as Lan Wang Simond, manager of the Mandarin Fund at Pictet Asset Management, are cautious about companies in the old economy such as manufacturing giants who have not adapted to changing demand patterns.

EURO CAUTION In currency markets, the euro nursed overnight losses as lingering concerns about the looming French election rattled the currency region's bonds. The single currency declined to $1.0581 EUR=, having moved little on Monday, due partly to the absence of U.S. investors because of the public holiday. It has fallen nearly 2 percent so far this month.

Political concerns have been front and center of investors' minds over the past week or so, with markets wary about the outcome of the French elections in the wake of Brexit."Everybody has learned lessons from last year's big surprises. People probably don't want to take big risks. The euro could face further pressure given there's still time before the election," said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank. The premium investors demand to hold French bonds instead of German debt rose to its highest since late 2012 after a poll showed the far-right Marine Le Pen narrowing the gap with more centrist opponents. The latest French poll overshadowed optimism that Greece may avert another crisis after a government official said the country had agreed with euro zone finance ministers to resume negotiations over its bailout review.

Fears that cooperation on the left could lead to a run-off between Socialist candidate Benoit Hamon or hard-left candidate Jean-Luc Melenchon and Le Pen, eliminating three main moderate candidates, have dogged the euro since Friday when the two leftists said they were discussing such cooperation. Closer to home, the Philippine peso' PHP=PDSP hit a fresh 10-year low against the greenback on Tuesday after it broke key support levels in the previous session though some likely selling by large state-run banks checked losses. Ten-year U.S. government bond yields US10YT=RR held around 2.44 percent while 30-year Japanese bond yields JP30YT=RR held at one-year high on growing views the central bank will tolerate a yield rise in those maturities. Oil prices were broadly steady after having suffered the first weekly decline in five weeks as the market weighed rising U.S. drilling and record stockpiles against efforts by major producers to cut output to reduce a global glut. Brent futures LCOc1 rose to $56.24 a barrel, while U.S. West Texas Intermediate crude CLc1 for April delivery added 0.6 percent to $53.71 a barrel.

Exclusive Mexico may force Slims America Movil to separate fixed unit ...

´╗┐Mexico's telecoms regulator has discussed forcing billionaire Carlos Slim to legally separate his fixed-line company Telmex from his mobile business, people familiar with the matter said, a move that would intensify antitrust rules against the company. Late on Monday, the regulator's seven-person board voted on whether to toughen, maintain or loosen rules against America Movil (AMXL. MX) and broadcaster Grupo Televisa (TLVACPO. MX), according to the three people, who declined to be named as deliberations were not public. Reuters could not confirm whether they decided to force Slim's company to separate Telmex. However, two of the sources said they expected the proposal was on the table. Representatives of America Movil and Televisa declined to comment. A spokesman for the regulator confirmed there was a board meeting on Monday but declined to elaborate. The measure, which was considered internally in recent weeks and months, would mean that the Federal Telecommunications Institute (IFT) does not believe antitrust measures against the company are enough to generate competition. Competitors complain that current rules intended to make America Movil rent out infrastructure to rivals are not working. A move to legally separate Telmex would go a step further in prising open the network.

Slim took a stake in Mexico's former state monopoly, Telmex, in 1990. Two decades of weak regulation and a lack of competition helped catapult him to the top of the list of world's richest people for several years. The separation proposal would not force America Movil to sell anything, but it would have to separate its fixed-line unit into a different legal entity, with certain independence in decision making, one of the sources said. A separate observer, who is an industry expert, said there were different ways to do a legal separation. "The devil is in the detail," said Elisa Mariscal, an adjunct professor at Mexico's CIDE University. "It might sound strong but the issue is how it's implemented."An announcement on the dominance rules is not expected until several days after Monday's vote, as the IFT must first notify the companies.

It will come more than three years after Mexico's president pushed through reforms designed to curb Slim's dominance of the local telecommunications market. The profit margin of America Movil, Latin America's largest phone company, has shrunk from more than 45 percent to less than 30 percent since the reform. Depending on the results of the revision, America Movil has said it plans to apply for a TV license at home, which Telmex has been prevented from doing since its 1990 privatization.

Shares in America Movil were down on Tuesday, falling slightly more after the news, before recovering to close down 0.78 percent. A similar measure was proposed by British telecommunications regulator Ofcom to force BT Group Plc