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UPDATE 3-U.S. Treasury says nine trade partners deserve scrutiny over currency practices

currency practices@ (Adds background in paragraphs 5-7)

WASHINGTON, May 28 (Reuters) - The Trump administration said on Tuesday that no major trading partner met its currency manipulation criteria but nine countries, including China, required close attention as Washington presses tariffs and negotiations to address trade deficits.

The Treasury Department, in a semi-annual report to Congress, said it reviewed the policies of an expanded set of 21 major U.S. trading partners and found that nine required close attention due to currency practices.

Ireland, Italy, Malaysia, Singapore and Vietnam were new additions to the watch list, which also includes China, Germany, Japan and South Korea. India and Switzerland were removed from the list of countries under extra scrutiny.

"No major U.S. trading partner met the relevant 2015 legislative criteria for enhanced analysis" as a currency manipulator, the department said in a statement.

The Treasury's three criteria for determining whether a country can be labeled a currency manipulator previously were a significant trade surplus with the United States, a sizeable current account surplus and evidence of one-sided, persistent currency intervention.

The report, usually released in April, was delayed this year and Treasury expanded its monitoring criteria to include not just America's 12 largest trading partners but any country with more than $40 billion in bilateral goods trade. It also lowered the current account surplus threshold from 3 percent of GDP to 2 percent, suggesting an expanded list of countries surveyed.

In its October 2018 report, Treasury did not label China or any other trading partner as a currency manipulator.

Then, against the backdrop of rising trade tensions with China, it said the yuan's appreciation would likely exacerbate the U.S. trade deficit but U.S. officials had found Beijing appeared to be doing little to directly intervene in the currency's value.

In response to the report, Singapore's central bank said it does not manipulate its currency for export advantage, while Malaysia said its interventions are limited to ensuring an orderly market and avoiding excessive volatility.

President Donald Trump has imposed tariffs on $200 billion worth of Chinese imports and begun the process of imposing tariffs on another $300 billion in Chinese goods.

Talks to end the trade dispute between the two countries collapsed earlier this month, with the two sides in a stalemate over U.S. demands that China change its policies to address a number of key U.S. grievances, including theft of intellectual property and subsidies for state enterprises.

The Treasury Department said Washington believes direct foreign exchange intervention by the People's Bank of China has been limited in the past year.

"Treasury will continue its enhanced bilateral engagement with China regarding exchange rate issues, given that the RMB (yuan) has fallen against the dollar by 8 percent over the last year in the context of an extremely large and widening bilateral trade surplus," Secretary Steven Mnuchin said in the statement.

China needs to aggressively address market-distorting forces, including subsidies and state-owned enterprises, the Treasury statement said. Improved economic fundamentals would support a stronger yuan and help reduce Chinas trade surplus with the United States, it said. (Reporting by David Alexander; Additional reporting by John Geddie and Aradhana Aravindan in SINGAPORE and A. Ananthalakshmi in MALAYSIA; Editing by Andrea Ricci, Sonya Hepinstall & Simon Cameron-Moore)