UPDATE 1-China's stocks post biggest rise in 3 months on expected MSCI inclusion
* MSCI inclusion bets, China products demand push indexes higher
* Flash crash in index futures leave broader markets unhurt
* Yuan posts second biggest monthly decline on record (Recasts, adds details)
By Samuel Shen and Saikat Chatterjee
SHANGHAI/HONG KONG, May 31 (Reuters) - Chinese shares posted their biggest daily gain in three months on Tuesday on growing expectations U.S. market index provider MSCI could add mainland stocks to its emerging market benchmark for the first time.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 3.4 percent to 3,169.56, while the Shanghai Composite Index gained 3.3 percent, to 2,916.62 points. The CSI300 ended May around 0.4 percent higher while the Shanghai stock index is around 0.7 percent lower.
Despite Tuesday's bounce, Chinese stocks are the worst performing in Asia so far this year with the Shanghai stock market down about 20 percent, according to Thomson Reuters data.
In the currency market, the yuan posted its second largest monthly fall on record against the dollar in May amid growing expectations of a U.S. interest rate hike as soon as June.
Growing expectations that MSCI will add mainland shares to its emerging markets index for the first time boosted sentiment in Hong Kong and China. Continuación...