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China's economic planners say they will combat local government debt and push on with changes in the housing sector in a bid to shore up growth

China reform hopes lift emerging currencies, commodities

HONG KONG  – Hopes that China will implement fresh economic reforms lifted emerging market currencies Tuesday while oil and metals prices saw a rare uptick, but stock markets struggled to extend the previous day’s gains, AFP reports.  After a secretive policy meeting that ended Monday, China’s economic planners said they would combat local government debt and push on with changes in the housing sector in a bid to shore up growth.

They also said they would “allow the market to play a bigger role” and “strengthen structural reforms”, state news service Xinhua reported. The announcement is the latest out of Beijing after it promised last year to allow the market to play a bigger role in the world’s number two economy and implement reforms of its bloated state-owned enterprises.

It also follows other moves to kickstart slowing growth, including six interest rate cuts since November last year. “We’ve had easing on multiple fronts in China and we are starting to see the green shoots of recovery there,” Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors Ltd., told Bloomberg News.

“We should see China’s economy turn the corner in 2016 and the US dollar peaking, which will have a powerful positive impact on commodities and related sectors.” Currencies of countries that rely on trade with China climbed against the dollar. The Australian dollar rose 0.1 percent, Indonesia’s rupiah surged 1.1 percent, the Thai baht was 0.2 percent higher and Malaysian ringgit 0.05 percent up. The South Korean won, Canadian dollar and Singapore dollar also advanced.

The US dollar also held most losses against its major rivals, buying 121.28 yen compared with 123 yen last week. And the euro continues to hold its own despite uncertainty in Spain after a general election left no party with a clear majority. The possibility of stimulus measures for the Chinese economy also lifted commodities, with copper rising 1.1 percent and iron ore surging more than three percent.

Oil, which has slumped more than 60 percent since summer 2014, edged up slightly after Brent hit an 11-year low Monday. However, most analysts expect prices to remain subdued by an ongoing global supply glut, tepid demand, the OPEC exporters’ club’s refusal to cut production and a strong dollar.

Regional stock markets fluctuated through the morning, with Tokyo down 0.1 percent by lunch, Hong Kong up 0.1 percent, Sydney 0.2 percent higher and Shanghai flat.

– Key figures around 0300 GMT –

Tokyo – Nikkei 225: DOWN 0.1 percent at 18,892.81 (break)

Hong Kong – Hang Seng: UP 0.1 percent at 21,806.82

Euro/dollar: UP to $1.0910 from $1.0915 late Monday

Dollar/yen: DOWN to 121.28 yen from 121.21 yen

New York – Dow: UP 0.7 percent at 17,251.62 (close)

London – FTSE 100: DOWN 0.3 percent at 6,034.84 (close)

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