Chinese shares edges higher on Tuesday while the country's central bank guided the yuan to its highest fix in almost a month as Beijing sought to keep markets calm heading into the Lunar New Year holidays. The Shanghai Composite Index added 0.8 percent in early trade, while the CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.9 percent. The gains recovered only part of Monday's losses, incurred after official surveys of China's manufacturing and services sectors disappointed and sent ripples of selling through markets globally. "The data suggest continued uncertainties and headwinds to the outlook," wrote Shengzu Wang, an analyst at Barclays. "We have seen no sign of stabilisation since the start of 2016." Given that, Wang was surprised China's central bank had not cut rates or reserve requirements, rather relying on huge injections of funds to tied the banking system over the Lunar New Year holidays. The People's Bank of China (PBOC) may have been concerned that such cuts would only encourage capital flight and further wagers on yuan devaluation. It has been fighting to keep the currency stable through a series of higher daily yuan fixes and a range of measures that essentially make it very expensive to short the currency. On Tuesday, it set the yuan at 6.5510 per dollar, the highest fix since Jan. 6 when a sudden drop in the currency sparked worldwide concerns Beijing was seeking a competitive depreciation. Still, many analysts suspect the currency will be allowed to drift lower over time both to help underpin exports and fight deflation risks at home. Some investors with deep pockets are laying money on it. Hedge funds have ramped up bets on a devaluation since the Bank of Japan cut rates below zero last week, with the bias towards yuan falls in options markets hitting its highest on record. Reuters data showed riskier bets that only pay out if the yuan weakens to levels well above 7 per dollar passed peaks hit around Beijing's one-off mini-devaluation last August. "Since the Bank of Japan was so dovish last week, all of these countries are under a lot more pressure to devalue," said a dealer with one Asian bank in London. Such talk will only heighten the focus on the PBoC's reserves position, due to be reported some time this week, for details on just how much intervention has been needed to shelter the yuan from capital flight.