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ASX closes down on Ukraine worries

The Australian sharemarket lost ground again as investors weighed the risks from the broadening of the Chinese yuan trading range and possible Western government sanctions on Russia.

Trade was subdued as the S&P/ASX 200 index closed 11.8 points, or 0.22 per cent, down at 5317.6 following the referendum in Crimea yesterday which showed an overwhelming 93 per cent support for the region to secede from Ukraine.

The Shanghai composite index was up 0.5 per cent at the close of the ASX as investors shrugged off a rise in the yuan back to a ten-month high of 6.1630 to the US dollar.

Over the weekend the People's Bank of China widened the trading band from one to 2 per cent around the central bank's daily peg as part of its plans to liberalise Chinese financial markets.

"It is a positive step in so far as it shows that China will not be deflected from medium term reforms by short term economic considerations (pace the evident slowdown in economic activity in recent months)," National Australia Bank global head of currency strategy Ray Attrill said.

The Australian dollar rallied off the day's low of US90.20 to US90.50¢ after Westpac chief economist Bill Evans, one of the most accurate forecasters in the past few years, revised his interest rate forecast.

Mr Evans expected a 25 point cut later this year but has switched to a neutral stance until late 2015 when he expects rates to begin rising.

"We still see those (negative) forces operating to moderate growth and inflation pressures but now assess that better news on employment; consumption; and business confidence will dampen those contractionary forces to exclude a sufficiently strong case to cut rates," he said.

Government 10-year yields were little changed at 4.047 per cent.

In Tokyo the Nikkei index was off 0.2 per cent.

Gold climbed $US3 to $US1383 an ounce, copper reversed a 0.4 per cent drop to trade little changed at $US6415 a tonne and spot iron ore fell 1.3 per cent to $US110.10 a tonne on Friday.

More to come…