By Ankur Banerjee

SINGAPORE (Reuters) -The dollar rose on Tuesday as investors pared back bets on near-term rate-cuts by the U.S. Federal Reserve following hawkish comments from European Central Bank officials, while worries of more attacks on ships in the Red Sea weighed on risk sentiment.

Against a basket of currencies, the dollar rose 0.253% to 102.90, after having gained 0.2% overnight in subdued trading during a U.S. public holiday on Monday.

The euro fell 0.3% to $1.09185, set for its steepest one-day percentage drop in two weeks. Sterling was last at $1.2681, down 0.36% on the day, edging away from a near-five month high of $1.2825 hit late December.

Comments from European Central Bank officials pushing back against early rate cuts cast a shadow on rates outlook globally. "It's too early to talk about cuts, inflation is too high," ECB's Joachim Nagel said on Monday, adding that the mistake of lowering interest rates too early should be avoided.

Money markets are pricing in 145 basis points worth of cuts to the ECB's deposit rate this year, most likely starting in April.

"The hawkish ECB commentaries last night have fuelled concerns that market pricing for the Fed rate path may also be aggressive," said Charu Chanana, head of currency strategy at Saxo in Singapore.

"Some safe-haven demand also likely to be at play with Red Sea disruptions escalating."

An official from Yemen's Houthi movement said on Monday the group will expand its targets in the Red Sea region to include U.S. ships, vowing to keep up attacks after U.S. and British strikes on its sites in Yemen.

Investors are now bracing for comments from the Federal Reserve's Christopher Waller, whose dovish turn in late November helped to send markets soaring in a blistering year-end rally. Waller is due to speak later on Tuesday.

Markets are pricing in a 70% chance of a 25 basis points (bps) cut in March from the Fed, versus 77% a day earlier, and 63% a week earlier, the CME FedWatch Tool showed, highlighting the shifting expectations on rate cuts.

However, traders are projecting cuts of over 160 bps this year, up from 140 bps of easing projected last week.

"We think the market may have got ahead of itself pricing almost seven 25 bp cuts from the Fed this year," said Hamish Pepper, fixed income and currency strategist at Harbour Asset Management, adding the dollar is likely to find support if markets reassess easing expectations and push short-term interest rates higher.

"Yes, inflation has fallen more quickly than expected, including core measures, but the labour market still looks too hot and may make it difficult for inflation to get all the way back to 2%."

The yield on 10-year Treasury notes was up 5.3 basis points to 4.003%, while the two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 7.3 basis points at 4.211%.

A data-heavy week awaits, with reports on Chinese fourth-quarter growth and U.S. retail sales all scheduled for Wednesday. This week's jobs and inflation data will be the focus for sterling traders to help fine-tune their interest-rate models.

Markets are pricing around 120 bps of rate cuts by the Bank of England in 2024, with the first one most likely in May.

Meanwhile, the yen weakened 0.20% to 146.07 per dollar after data showed Japan's wholesale inflation was flat in December from a year ago, slowing for the 12th straight month.

The data suggest that rises in consumer inflation will moderate in coming months and take pressure off the Bank of Japan (BOJ) to phase out its massive stimulus soon.

Expectations of a policy shift from the BOJ had bolstered the yen towards the end of 2023, with the currency gaining 5% against the dollar in December. It has since dropped sharply and is down 3% so far in January.

Elsewhere, the Australian dollar fell 0.53% to $0.6625, while the New Zealand dollar fell 0.46% to $0.61715.

By Tom Westbrook

SINGAPORE (Reuters) - Asian shares dropped to a one-month low, U.S. stock futures fell and the dollar rose on Tuesday as hawkish remarks from central bankers tempered expectations for interest rate cuts and traders waited to hear from the Fed's influential Christopher Waller.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1% to its lowest since mid-December. Japan's Nikkei looked set to snap a sharp six-session winning streak with a 0.7% dip away from Monday's 34-year high.

U.S. markets were closed for a holiday on Monday, but S&P 500 futures were 0.4% lower in Asia trade, Fed fund futures fell - reflecting a slight cooling in interest rate cut expectations - and short-term Treasury yields rose.

Two-year yields were up 6.5 basis points in early Tokyo trade and tugged the dollar to one-month highs on the risk-sensitive Australian and New Zealand dollars. [FRX/]

On Monday European bonds were sold after European Central Bank officials pushed back on market bets on rate cuts. [EUR/GVD]

Bundesbank President Joachim Nagel said it was too early to discuss cuts and Austrian central bank governor Robert Holzmann warned not to bank on a cut at all this year.

"The upshot ... was to see money markets scaling back the implied probability of a 25 bp ECB cut in March to 26% from 40%," said NAB currency strategist Ray Attrill.

Two-year German bunds rose more than 7 bps to 2.6% and 10-year bunds rose 5.4 bps to 2.2%, lending support to the euro, which climbed to a three-week high against the Swiss franc.

A stronger dollar pushed the euro about 0.3% lower to a one-week trough on the greenback at $1.0918 on Tuesday.

The Australian and New Zealand dollars dropped 0.6% each, with the Aussie falling through its 50-day moving average to $0.6620 and the kiwi down to $0.6161. [AUD/]

IOWA AND INTEREST RATES

Policy and politics top the radar for the rest of the session.

Donald Trump muscled past his rivals to capture the first 2024 Republican presidential contest in Iowa on Monday, according to Edison Research projections, as expected.

His candidacy is likely to stir volatility in markets.

Federal Reserve Board Governor Waller's speech on the economic outlook at 1600 GMT, meanwhile, is to be closely watched since market's had so heartily cheered a shift in his hawkish views in November, when he laid out a path to cuts.

"Recall, Waller was responsible for setting up the rally in U.S. equities (when) he gave a defined path by which the Fed could ease," said Pepperstone analyst Chris Weston.

"The risk for gold, Nasdaq 100 longs and U.S. dollar shorts is that he pushes back on market pricing for a March cut and shows a lack of urgency to normalise policy."

Gold steadied at $2,052 an ounce, holding on to gains from last week. [GOL/]

Elsewhere in commodities, iron ore extended falls to touch more than five-week lows in Singapore, dragging on share prices for Australia-listed miners. [IRONORE/]

Houthi forces in Yemen struck a U.S.-owned and operated dry bulk ship with an anti-ship ballistic missile on Monday though oil, which has been supported by the instability in the shipping lane, gave no immediate reaction.

Brent crude futures were last down 0.1% to $78.05 a barrel.

On the data front, Australian consumer sentiment took a turn for the worse in January as higher mortgage rates stoked concerns over finances. Japan's wholesale inflation was flat in December from a year earlier, slowing for the 12th consecutive month, taking pressure off the Bank of Japan to raise rates.

Bitcoin was steady at $42,600.

By Chijioke Ohuocha

ABUJA (Reuters) - Nigeria's inflation rate rose to its highest in more than 27 years in December as food prices surged, exacerbating a cost-of-living crisis and piling more pressure on the central bank to raise interest rates.

Consumer inflation rose for the 12th straight month in December to 28.92% year on year from November's 28.20%, the National Bureau of Statistics said on Monday.

Inflation in Africa's biggest economy and most populous nation has not climbed this high since mid-1996.

The food inflation rate, which accounts for the bulk of Nigeria's inflation basket, rose to 33.93% in December from 32.84% a month earlier.

The statistics office said prices rose for a broad range of food items including bread and cereals, oil, fish, meat, fruit and eggs.

Analysts say higher fuel prices and a weaker naira currency have also stoked price pressures.

David Omojomolo, Africa economist at Capital Economics, said "inflationary pressures are only likely to build from here," citing second-round effects from the removal of a fuel subsidy last year and naira weakness.

He predicted that inflation would breach 30% by the end of the first quarter and said it was unlikely to peak until the middle of 2024.

President Bola Tinubu last May embarked on Nigeria's boldest reforms in decades by scrapping a costly but popular fuel subsidy and devaluing the currency to try to revive economic growth. But growth is yet to pick up while inflation has worsened.

Central Bank of Nigeria (CBN) Governor Olayemi Cardoso is yet to hold a rate-setting meeting since taking office in September.

"At the next meeting, we think that the CBN will need to raise rates by 400 basis points, to 22.75%, to show that it is taking the inflation fight more seriously," Capital Economics' Omojomolo said in a research note.

"There's a clear risk, though, the CBN underwhelms again. Doing so would undermine much of the momentum and optimism around the policy shift that President Tinubu started last year."

NEW YORK (Reuters) - Global banks could boost their valuations by a combined $7 trillion in the next five years if they take major steps to promote growth and boost productivity, the Boston Consulting Group said in a report on Monday.

Lenders could roughly double their current valuations if they pursue growth and improved price-to-book ratios despite obstacles, the consultant said.

"The largest driver of pessimism about the banking sector has been the significant drop in profitability," BGC said.

About 75% of bank stocks had price-to-book ratios below 1 in 2022, while price-to-earnings multiples were almost half of 2008 levels. Meanwhile, shareholder returns on bank stocks have lagged those of major market indexes since the crisis, and the gap is widening.

Even if they invest in productivity and radically simplify their businesses, bank profits will remain under pressure from higher capital requirements and increased competition from newer players such as fintechs, BCG said.

"Banks are not likely to return to the profitability levels and valuations that existed prior to the global financial crisis," the consultant said.

By Jennifer Rigby

LONDON (Reuters) - The Bill & Melinda Gates Foundation plans to spend more this year than ever before -- $8.6 billion -- as wider health funding for the lowest income countries stutters after the COVID-19 pandemic.

The 2024 budget agreed by the foundation’s board is up 4% on last year and $2 billion more than in 2021.

In a statement, the foundation said global health budgets were in decline overall and contributions to health in the lowest-income countries were stalling.

The Gates Foundation is already a key global health funder and has faced criticism over its undue influence, but last year chief executive Mark Suzman said it could not back away until others stepped up, with plans to spend $9 billion annually by 2026.

“We can’t talk about the future of humanity without talking about the future of health,” said Bill Gates, the technology billionaire who founded the foundation in 2000 with his then-wife Melinda, who still works with him on it.

The Gates Foundation has long focused on innovation in healthcare, and the new funding aims in part to open up access to more new technologies for the world’s most vulnerable people.

After a pivot to COVID during the pandemic emergency, 2024 will see a return to the foundation’s long-established priority areas of tackling wider infectious disease threats and the leading causes of child mortality.

Gates said mothers and babies dying simply because of where they live “keeps me up at night”.

He and other Gates executives plan to carry backpacks at the World Economic Forum event in Davos, Switzerland, which starts on Monday, showcasing simple health products that could save millions of lives, from vaccine patches to an artificial intelligence (AI)-enabled ultrasound tool. Gates will also talk about the potential for AI in health more broadly at the event.

By Ben Blanchard and Fabian Hamacher

TAIPEI (Reuters) -The United States looks forward to continuity in the Taiwan-U.S. relationship under the new Taiwanese administration and the U.S. commitment to the island is "rock solid", a former senior U.S. official told Taiwan President Tsai Ing-wen on Monday.

Lai Ching-te from Taiwan's ruling Democratic Progressive Party (DPP) won the presidential election on Saturday as expected and will take office on May 20.

In a show of support for the government, a senior administration official said last week that President Joe Biden planned to send an unofficial delegation to the Chinese-claimed island. Taiwan's government rejects Beijing's sovereignty claims.

The Biden administration has feared that the election, transition and new administration would escalate tensions with Beijing, which has pressured Taiwan militarily and economically to assert its sovereignty claims.

Meeting Tsai at the presidential office, former U.S. National Security Advisor Stephen Hadley said he was there to convey from the American people congratulations on the election.

"Taiwan's democracy has set a shining example to the world," Hadley said, in comments released by Tsai's office.

"We are honoured to have the opportunity to meet with you today to reaffirm that the American commitment to Taiwan is rock solid, principled and bipartisan and that the United States stands with its friends," he added.

Hadley said he looked forward to meeting Lai and other political leaders.

"We look forward to continuity in the relationship between Taiwan and the United States under the new administration, and for common efforts to preserve cross-strait peace and stability."

China, which has never renounced the use of force to bring Taiwan under its control, has criticised several countries for congratulating Lai on his election victory, saying they should not interfere in China's affairs.

Taiwan's government says Beijing has no right to speak for the island's people or represent them on the world stage.

The United States is Taiwan's most important international backer, despite the lack of formal diplomatic ties, and a major arms supplier to Taipei.

On Saturday following the election, U.S. President Joe Biden said the United States does not support the independence of Taiwan.

Lai says he does not seek to change the status quo across the Taiwan Strait, sticking by Tsai's long-standing policy of neither seeking independence nor union with China and that only Taiwan's people can decide their future.

Tsai told the U.S. delegation, which also includes former Deputy Secretary of State James Steinberg, that their visit fully demonstrates U.S. support for Taiwan's democracy and highlights their "staunch" partnership.

"We hope that Taiwan-U.S. relations continue to advance and serve as a key driving force in regional and global prosperity and development," he said.

While Lai won election, albeit with less than half the vote, the DPP lost its majority in parliament, potentially making it much harder for him to pass legislation.

Taiwan's stock market on Monday largely brushed off any post-election uncertainty, with the benchmark index up around 0.5%.

By Rod Nickel

WINNIPEG, Manitoba (Reuters) - Canada is considering a cap on the number of international students allowed to live in Canada, Immigration Minister Marc Miller said according to a CTV report, as the government faces criticism for a housing affordability crisis.

Canada depends on immigration to drive its economy and support an aging population and Prime Minister Justin Trudeau has been ramping up annual immigration. The housing crisis has been blamed on an increase in migrants and international students fueling demand for homes just as inflation has slowed construction.

Miller said in a taped interview with CTV Question Period that the Liberal government is considering a cap on international students in the first and second quarters this year.

"That volume is disconcerting," Miller is quoted by CTV as saying, referring to the number of international students in Canada. "It's really a system that has gotten out of control."

He did not say how much of a reduction in international students the government is considering.

Miller's spokesperson could not be immediately reached.

Official data show there were more than 800,000 foreign students with active visas in 2022, up from 275,000 in 2012.

The interview with Miller is scheduled to air on Sunday.

Canada is a popular destination for international students since it is relatively easy to obtain a work permit.

The Liberal government floated the idea of capping the number of foreign student visas in August, but Housing Minister Sean Fraser said then that the government had not yet made a decision of whether to pursue that option.

Miller said he planned to discuss the problem with provincial counterparts.

Trudeau's Liberals have seen their popularity plummet after more than eight years in office, with polls placing them well behind the official opposition Conservatives led by Pierre Poilievre, who have criticized the government for not properly managing the housing issue.

Investing.com -- Retail sales data and bank earnings will be the highlight of a holiday shortened week as markets await more insights on the health of U.S. consumers. Global leaders gather in Davos, China is to release full year GDP figures and oil prices look set to remain volatile. Here’s what you need to know to start your week.

U.S. retail sales

Wednesday’s U.S retail sales data will be closely watched for indications that consumer spending - a major driver of economic growth - is remaining resilient in the face of elevated interest rates.

The Federal Reserve hiked rates last year in a bid to tame inflation. But with price increases slowing, the potential pace of interest rate cuts this year, and whether the economy will avoid a recession, are the key questions hanging over markets.

Retail sales are expected to have risen 0.4% in December, after a 0.3% increase in November.

Data on housing starts and existing home sales are expected to point to a housing market that’s still struggling in the face of higher borrowing costs.

Investors will also have the chance to hear from several Fed officials including Fed Governor Christoper Waller as well as Atlanta Fed President Raphael Bostic and San Francisco Fed head Mary Daly.

Bank earnings

Bank earnings are set to continue with Goldman Sachs (NYSE:GS) and Charles Schwab (NYSE:SCHW) due to report on Tuesday and Wednesday respectively, after a mixed bag of earnings from big lenders on Friday.

Major U.S. banks reported lower profits in a choppy fourth quarter clouded by special charges and job cuts, with signs an income boost from high interest rates is waning and some consumer loans are starting to sour.

Still, the country's largest lenders JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC), and Citigroup (NYSE:C) struck an upbeat tone on the economy, noting that consumers remained resilient even as defaults on consumer loans began returning to pre-pandemic levels.

Jamie Dimon, CEO of JPMorgan Chase, the biggest U.S. bank and a bellwether for the economy, said consumers were still spending and that the markets were expecting a soft landing, but warned government spending could continue to push prices higher.

Davos

The 54th annual World Economic Forum titled “Rebuilding Trust,” gets underway on Monday in the Swiss ski resort of Davos.

Political figures, central bankers and business leaders will discuss a challenging global economic outlook, with wars in Ukraine and Gaza, trade concerns and rising debt levels all on the agenda.

China’s Premier Li Qiang and French President Emmanuel Macron, the only G7 leader attending Davos, are both due to give special addresses.

European Central Bank President Christine Lagarde is scheduled to make three appearances. International Monetary Fund Managing Director Kristalina Georgieva, World Bank President Ajay S. Banga, and World Trade Organization Director-General Ngozi Okonjo-Iweala will also be in attendance.

China GDP

China is to release full-year GDP figures on Wednesday which will show how close the world’s second-largest economy got to realizing the official 5% growth target for 2023.

A protracted property crisis, cautious consumers and geopolitical challenges are also pointing to another bumpy year ahead for China’s economy.

Elsewhere, Germany is to release full year GDP data on Monday which could show that the Eurozone’s largest economy suffered a shallow recession in 2023.

The UK is to release what will be closely watched inflation data on Wednesday, a day after the latest employment data. Underlying inflation is expected to remain well above the Bank of England’s 2% target.

The BoE has said it plans to keep interest rates high "for an extended period" to ensure the surge in inflation does not cause long-term problems in the economy, but investors are betting on a first rate cut as soon as May.

Oil prices

Oil prices look set to remain volatile in the week ahead after rising 1% on Friday as an increasing number of oil tankers diverted course from the Red Sea following strikes by the U.S. and Britain on Houthi targets in Yemen after attacks on shipping by the Iran-backed group.

For the week, Brent was down 0.5% and U.S. crude 1.1% lower. Earlier in the week, sharp price cuts by top exporter Saudi Arabia and a surprise build in U.S. crude stockpiles spurred supply worries.

Although the lack of shipping through the Red Sea... does create transportation issues for some crude supplies, the impact on the physical oil markets is, thus far, minimal," Matt Stephani, president at investment advisory firm Cavanal Hill Investment Management told Reuters.

"If the conflict were to spread to the other side of the Arabian peninsula... oil markets may react much more significantly," Stephani added.

--Reuters contributed to this report

(Reuters) - The United States and Britain launched strikes from the air and sea against Houthi military targets in Yemen in response to the movement's attacks on ships in the Red Sea, a dramatic escalation of the Israel-Hamas war in Gaza.

Oil climbed [MKTS/GLOB] and stock markets tensed on the news.

Comments from investors and analysts:

KHOON GOH, HEAD OF ASIA RESEARCH, ANZ, SINGAPORE

"I think at this stage, it's difficult to predict. Whilst the attacks have already seen disruptions and diversions of shipping and that has already caused quite a sharp jump in shipping freight rates just in the last few weeks, if this strike is able to...resolve the issue and shipping lanes can be secured again and things normalise, then that'll be positive as we'll see a normalisation of freight rates.

"I think the concern is that if this starts to escalate... which will cause a potential spike up in oil price in particular, and further disruptions in shipping lanes.

"Markets are taking a wait-and-see approach for the time being, hence we're not seeing too much of a reaction. If we see a massive escalation of the situation...then the traditional flight-to-safety will see U.S. Treasuries, safe-haven currencies like yen and Swiss franc benefit."

SHANE OLIVER, CHIEF ECONOMIST, AMP (OTC:AMLTF), SYDNEY

"The U.S. and UK launching air strikes on Houthis in Yemen is adding to the risk of Iran being directly drawn into the conflict which would threaten oil supplies.

"The creeping widening in the Israel/Hamas conflict poses a risk to global growth and inflation, for example Houthi attacks on Red Sea shipping adding to transport costs as ships have to go around Africa.

"A weaker patch is often evident into February or March after seasonal strength from October. While we expect shares to provide reasonable returns this year, they are likely to be more constrained and vulnerable than last year and worries about delays in rate cuts, recession and geopolitics could drive a deeper first half pullback than seen last year."

ROB CARNELL, ASIA-PACIFIC HEAD OF RESEARCH, ING, SINGAPORE

"When we got in this morning after what was fairly disappointing U.S. inflation data, you'd have expected bond yields to spike higher on that. In fact, they did the opposite. That's probably a reaction to what's been happening in the Middle East with the U.S., UK air strikes on the Houthis. There will be a shift back towards risk aversion. This hasn't fully blossomed out into a proper risk-off mode.

"I think people are looking for a little bit of safety at the moment. Possibly, also, coming ahead of this weekend's Taiwan election, most people are just thinking 'maybe I want to take a little bit of risk off the table', and that's maybe a factor as well. So I think the bond market's probably the clearest indication of where things are going."

By Joe Cash, Ellen Zhang and Liangping Gao

BEIJING (Reuters) -China's exports grew at a faster pace in December, while deflationary pressures persisted last month, keeping alive expectations for more policy easing measures to shore up an economy carrying significant pockets of weakness into 2024.

Chinese policymakers could breathe a sigh of relief on signs global trade is slowly turning a corner with the prospect of lower borrowing costs on the horizon, but a protracted property crisis, cautious consumers and geopolitical challenges point to another bumpy year for the world's second-biggest economy.

Exports grew 2.3% from a year earlier in December, customs data showed on Friday, compared with a 0.5% increase in November and beating the 1.7% boost expected in a Reuters poll. Imports grew by 0.2% year-on-year, missing forecasts for a 0.3% increase but still reversing a 0.6% drop a month prior.

"The better export data is first and foremost driven by semiconductors and electronics, and the recovery on that side comes from a cyclical rebound in consumer demand overseas," said Xu Tianchen, senior economist at the Economist Intelligence Unit.

Xu said the figure was also buoyed by a low statistical base since "there was severe disruption to exports last December following China's abrupt reopening."

Still, the improved Chinese export data last month joins those from South Korea, Germany and Taiwan in suggesting global trade is starting to mount a comeback, after higher interest rates in the United States and Europe crimped demand over 2023.

Last year, China's exports fell for the first time since 2016.

The United Nations has warned of a likely contraction in goods trade by $2 trillion or 8% in 2023.

South Korea's exports, a closely watched indicator of global trade, rose for a third month in December, while the latest German export data for November surprised on the upside.

Analysts also anticipate that interest rates will drop at least 1.5 percentage points in the United States and Europe this year, which should improve demand for imported goods.

And yet, consumer prices in China fell for a third month in December while factory-gate prices extended a more-than-year-long decline, separate data from the National Bureau of Statistics showed, highlighting the persistence of deflationary forces in the Asian giant's economy.

The consumer price index rose 0.2% in 2023, the slowest pace since 2009, and full-year producer price index fell 3.0%, marking the steepest downturn since 2015.

"The deflationary pressure in China's economy remains as domestic demand is still weak. The property sector continues to weigh on the economy," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

Analysts expect more policy support measures over the short term to spur demand.

"Consumption will likely pick up into the Lunar New Year, but more stimulus is needed to boost household spending and eliminate deflationary pressure," UBS analysts said in a note.

Chinese policymakers also will have to contend with underpowered overseas economies, with the World Bank on Tuesday warning that global growth is set to slow for a third year in a row.

"New foreign orders for Chinese producers increased significantly last month, but it's not a long-term trend," said Dan Wang, chief economist at Hang Seng Bank China.

Market reaction to the data was largely muted. China's blue chip CSI300 stock index fell 0.17%, while Hong Kong's Hang Seng Index stayed steady, as did the yuan against the dollar.

FRAGILE DEMAND PROSPECTS

The world's biggest energy consumer bought in record levels of coal and crude oil over 2023, as demand recovered form a pandemic-induced slump despite the economic headwinds. Iron ore imports also enjoyed a record-breaking year.

And soybean imports jumped for the first time in three years, as Chinese traders ramped up purchases, particularly from Brazil, to take advantage of cheaper beans from a bumper crop there.

But iron ore futures slipped on Friday, off the back of the CPI and PPI data, which pointed to soft demand prospects and dented investor sentiment.

Julian Evans-Pritchard, head of China Economics at Capital Economics, said he expected import volumes to improve in the near-term thanks to further policy support boosting demand for commodities.

"The ongoing cyclical recovery in economic activity will underpin a slight rise in core inflation," he said in a note.

"That said, weak global growth and continued overinvestment in China means that deflation risks will continue to hang over its economy for some time."

Most analysts say the uptick in exports will provide only a modest boost to domestic demand.

"Exports improved on the margin... but exports as a pillar for growth in China are not strong enough to boost overall domestic demand," Pinpoint Asset Management's Zhang said.