China signaled on Friday it was opposed to a bigger rise in the yuan even as markets bet that Beijing's 2.1-percent revaluation would be just the first stage in a long upward march for the currency.

The yuan began trading in Shanghai at 8.11 per dollar, the new rate announced on Thursday evening, and then hugged a tight range under the watchful gaze of the central bank before ending the day at 8.1111.

Financial markets outside China betting on the future value of the yuan centered on a rate of 7.7 per dollar in one year's time -- a rise of over 5 percent from Thursday's level.

That market pricing tallied broadly with a Reuters poll on Friday of 33 economists, who on average forecast a yuan exchange rate 7.78 per dollar by the middle of 2006.

But the official China Daily newspaper tried to calm talk that the currency would lurch higher.

"Expectation for a bigger appreciation of the yuan's value was, and will be, unrealistic," the paper said in an editorial.

While the editorial is not necessarily a statement directly from the authorities, as an official organ, the paper is unlikely to publish a view disapproved of by the government.

The State Administration of Foreign Exchange (search) published detailed rules on the trading limits for the yuan, saying that it would be allowed to rise or fall by 1.5 percent per day against foreign currencies other than the dollar.

While markets still expect big yuan gains later, traders turned more cautious about an immediate flow of funds into Asian currencies.

The dollar clawed back close to 1 percent against the yen after the Japanese currency scored its biggest one-day gain in three years on Thursday with a rise of more than 2 percent. Equity investors were also wary with export-heavy stock markets in Japan and South Korea suffering losses.

Led by the United States, government leaders and central bankers from a raft of China's trading partners have welcomed the move, which came after two years of pressure from foreign governments and global markets.

"They've put in place a mechanism that provides room for significant movement over time in the currency, and they've expressed a commitment to using market forces to let the currency move," Treasury Secretary John Snow (search) said.

But the China Daily (search) editorial suggested China was still concerned about fresh pressures for more yuan appreciation.

The revaluation, from 8.28 per dollar, would draw more speculative funds into China in anticipation of a further appreciation, the newspaper said.

That could make it more difficult to restore order to the property sector, where a surge of money inflows has sent prices spiraling upward.

"Regulators should be vigilant to developments in this regard," the paper said.

The Commerce Ministry was less concerned, saying the revaluation would help promote balanced growth in exports and imports, but would not have a major impact on overall trade.

Europe's top trade official concurred.

"Everyone will be waiting to see what new currency regime finally emerges, but I do not expect to see an early or significant impact on trade," European UnionTrade Commissioner Peter Mandelson said in a statement.

Many economists expect China, with its cheap labor and huge, efficient factories to be able to absorb the extra cost that a revaluation entails.

China's benchmark stock index rallied more than 2 percent as shares in airlines and oil companies, which mostly count costs and debt in dollars, led the advance.

The Asian Development Bank (search) estimated the revaluation could shave one quarter to one half of a percentage point off economic growth in China next year, which has been an engine of global expansion for the past few years.

But the bank also said the pain was worth it.

"While there is a short-term downside in terms of losing a little bit of their flexibility in exports, over the medium- to long term that would be more than compensated by more efficient allocation of resources," ADB chief economist Ifzal Ali told Reuters.

Under the new currency regime adopted along with the revaluation, China has given itself the flexibility to make incremental increases in the yuan.

It will value the yuan against a basket of currencies of China's main trading partners and said the currency would be allowed to rise or fall by 0.3 percent a day against the dollar and by 1.5 percent against other currencies.

But some experts said the Chinese authorities, conservative by nature, were likely to wait patiently to test economic and political reaction to the shift before taking major new steps.

After all, China has had the same flexibility for creeping appreciation since 1994 but has not used it since 1996.

Sitting tight at the yuan's new level could keep alive tensions with the United States, which has been a vocal critic of China for maintaining what it saw as an undervalued exchange rate that hands Chinese exports unfair advantage.

With the heat possibly off the yuan issue for now, the White House was keen to highlight other bones of contention.

U.S. Commerce Secretary Carlos Gutierrez (search) told Reuters on Friday that President Bush would appoint a senior official to fight global piracy and theft of intellectual property -- something the U.S. demands China address.

"Our goal is (to reduce China piracy) to zero," he said.