SYDNEY (Reuters) - The Australian Stock Exchange and Bank of China Ltd have agreed to work together to boost yuan trading in Australia, bolstering China's efforts to promote the use of its currency in international trade.

China's fourth-biggest lender was appointed on Tuesday as the official yuan clearing bank in Australia, a day after the two countries signed a landmark free trade deal.

The agreement with the ASX will see the two companies expand cooperation in promoting the yuan, or renminbi, as a currency in Australia's financial markets, including developing yuan-denominated bonds and derivatives that can be quoted and traded on the ASX, they said.

It would also help improve the attractiveness of Australia as a listings location for Chinese companies.

"The Bank of China attaches great importance to the development of Sydney as an offshore RMB centre," Bank of China Chairman Tian Guoli said in a joint statement on Wednesday.

"The expanded cooperation between the Bank of China and ASX will facilitate cross-border RMB investment and financing by business, and promote Sino-Australian trade and economic links."

The deal would see Sydney join Sungapore, Seoul, Paris, Luxembourg, London, Frankfurt, Toronto, Qatar and Hong Kong as one of the global centres for yuan trading.

China is Australia's single biggest export market with two-way trade flows of around A$150 billion in 2013. However, only about 1 per cent is conducted in renminbi.