China shares jump after Hong Kong scraps yuan limit ahead of cross-border trading link launch

Chinese stocks jumped Wednesday after Hong Kong scrapped a daily limit on how much yuan residents can buy ahead of the launch of cross border share trading next week that widens access for foreign investors. Tokyo's Nikkei index touched a seven-year high as the yen hovered near a multi-year low amid speculation of a snap Japanese election. Other global benchmarks were lower.

KEEPING SCORE: European shares slipped in early trading. Britain's FTSE 100 dropped 0.4 percent to 6,600.19 and France's CAC 40 dropped 0.7 percent to 4,212.98. Germany's DAX lost 1.1 percent to 9,264.09. U.S. stocks were set to open lower, with Dow futures dipping 0.2 percent to 17,528. Broader S&P 500 futures slipped 0.3 percent to 2,031.40.

YUAN LIMIT: The Hong Kong Monetary Authority announced it was ending the 20,000 Hong Kong dollar ($2,580) daily limit on yuan purchases by local residents. That added to investor anticipation ahead of next week's launch of the Shanghai-Hong Hong stock trading link, which promises to give local and foreign investors a bigger foothold in China's tightly controlled stock markets. HKMA Chief Executive Norman Chan said without the limit "it will be more convenient for Hong Kong residents to participate" in the trading link.

ELECTION TALK: Elsewhere in Asia, investors again latched on to speculation that Japan's Prime Minister Shinzo Abe may call a snap election instead of going ahead with a planned second hike in consumption tax. Such a move would take pressure off Asia's second biggest economy in the short term. It has suffered after the government raised the consumption tax in April to help stabilize tattered public finances.

THE QUOTE: "Japanese equities have proved to be the gift that keeps on giving after recent gains," said Stan Shamu, strategist at IG Markets in Melbourne.

ASIAN DAY: China's Shanghai Composite Index surged 1 percent to close at 2,494.48 after Hong Kong's de facto central bank said it was ending the currency conversion limits. Japan's benchmark Nikkei 225 closed 0.5 percent higher at 17,197.05 after rising as much as 1.4 percent. South Korea's Kospi gained 0.2 percent to 1,967.27. Markets fell in Australia, Indonesia and Taiwan, but rose in the Philippines, India and Indonesia.

CURRENCIES: The dollar slipped to 115.24 yen from 115.72 in late trading Thursday. The euro rose to $1.2473 from $1.2466.

ENERGY: Benchmark U.S. crude oil slipped 52 cents to $77.42 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 54 cents to close at $77.94 a barrel on Tuesday. Brent crude fell $1.29 to $81.10 on the ICE Futures exchange in London.