May 11 (Bloomberg) -- China's People's Daily newspaper said it incorrectly translated a report placed on its English language online edition to say that a change in the yuan's peg will be announced next week.

``The English story is mistranslated and has already been pulled from our Web site,'' the state-owned newspaper's English editorial department said in a statement faxed to Bloomberg. Financial markets ``hope'' for a shift in the peg, the People's Daily Online Chinese language service reported, citing the May 7 China News Service report.

The yen jumped against the dollar and euro and U.S. Treasury notes dropped after Bloomberg published headlines at 9:22 a.m. London time citing the English language report. The People's Daily article said a revaluation of 1.26 percent to 6.03 percent in the yuan ``will be announced.''

``When these stories come up, it piles the pressure on the market to buy Asian currencies,'' said Adrian Foster, head of currency strategy at Dresdner Kleinwort Wasserstein in London. ``The article has been discredited, but there's still a story there: Asian currencies including the yen do need to appreciate, and this is going to be part of that picture.''

`Will Take Time'

China's currency has been allowed to trade within 0.3 percent of about 8.3 per dollar since 1995. Permitting the yuan to trade more freely would address criticism from Fed Chairman Alan Greenspan and U.S. Treasury Secretary John Snow that the peg gives Chinese exports an unfair advantage.

``A policy change on a yuan revaluation would only be announced by the People's Bank of China or the State Council after Premier Wen Jiabao had made up his mind,'' said Hu Biliang, a senior economist at the Beijing-based Chinese Academy of Social Sciences. ``The government is moving in this direction but it will take time.''

The English language edition of the People's Daily Online didn't give a source for the report, posted on its Web site at 2:51 p.m. Beijing time today. The newspaper is considering whether to issue a correction, the editor of the English Web site, who gave his name only as Ying, said in an interview.

Yen Gains

The China News Service report, dated May 7, said investors are ``hoping'' China and the U.S. ``will announce a widening of the yuan trading band or a yuan revaluation with the expectation of a 1.26 percent gain in the yuan's value after a month and 6.03 percent gain after a year.''

The yen rose to 105.36 per dollar at 11:43 a.m. in London, from 105.56 late yesterday in New York, according to electronic currency-dealing system EBS. Japan's currency strengthened to as much as 104.90. It advanced to 135.75 per euro, from 135.96. The dollar was at $1.2884 per euro, from $1.2881.

The spokesman for China's central bank said there is no timetable for a change in the yuan and the bank has never given advance notice of major policy changes.

A decision to allow the yuan to gain may make Asian governments, including Japan's, more tolerant of stronger currencies. Japan is unlikely to sell yen to quash a rally, said Jim O'Neill, head of global economic research at Goldman Sachs Group Inc. in London.

Deputy Finance Minister Li Yong said on May 6 at a press briefing in Istanbul that China is ``working very hard'' to change its exchange-rate system, though hasn't yet decided on a particular course of action or a timeframe for any move.

To contact the reporter on this story: Janet Ong in Shanghai at jong3@bloomberg.net

Last Updated: May 11, 2005 07:29 EDT