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Chinese shares lead markets advance

Chinese shares lead markets advance

Chinese stocks led world markets higher Wednesday as they rebounded following hefty declines in the wake of last weekend's surprise interest rate increase from the country's central bank.
Trading remained lackluster around the world though as many traders won't be returning to their desk until the new year and amid a light economic calendar.
In Europe, Germany's DAX was up 23.61 points, or 0.3 percent, at 6,995.71 while the CAC-40 in France rose 25.24 points, or 0.7 percent, at 3,883.96.
The FTSE 100 index of leading British shares fell 7.76 points, or 0.1 percent, to 6,001.16 following a four day break _ on Christmas Eve, the FTSE closed above 6,000 for the first time since the summer of 2008.
Analysts said that the 6,000 level may act as a barrier to any more sustained gains before the year-end when much of the trading flow is reliant on investors closing out positions to present their portfolios in as strong a light as possible.
"Before Friday, the FTSE hadnt closed above 6000 since June 2008, and it will now be interesting to watch and see whether investors will want to take profits out of this latest surge, or dig in and set 6000 as a base for further growth in 2011," said Ben Critchley, sales trader at IG Index.
Wall Street was poised for a modest advance at the open following another fairly subdued day of trading on Tuesday, when activity was further dented by the big snowstorm that has hit New York _ Dow futures were up 13 points at 11,522 while the broader Standard & Poor's 500 futures rose 2.2 points to 1,256.30.
With no major economic data scheduled for the U.S. session, investors will be keeping a close eye on a government bond auction in light of a weak offering the previous day _ on Tuesday, the Treasury Department sold $35 billion in five-year notes on Tuesday, but demand was weaker than expected as fewer investors, including foreign buyers, turned out.
The Treasury is planning to auction $29 billion in seven-year notes later.
The biggest stock market gains Wednesday were recorded in China, where the Shanghai Composite Index rose 0.7 percent to close at 2,751.53 and Hong Kong's Hang Seng index climbed 1.5 percent to finish at 22,969.30.
Chinese stocks bounced back after two days of losses in reaction to news at the weekend that authorities would raise a key interest rate. Chinese officials are trying to keep a lid on rising inflation and the rate hike was the second such move in just over two months.
Analysts warned, however, that Wednesday's rally could be short lived.
"It's simply a technical rebound," said Qian Qimin, an analyst at Shenyin & Wanguo Securities, in Shanghai. "Today's rebound will not last."
Elsewhere, Japan's benchmark Nikkei 225 stock average rose 51.91 points, or 0.5 percent, to close at 10,344.54 while South Korea's Kospi was 10.17 points, or 0.5 percent, higher, ending at 2,043.49.
Benchmark crude for February delivery fell 38 cents to $91.11 a barrel on the New York Mercantile Exchange.
Many analysts think that a big feature of 2011 will be what happens to oil prices and what the impact on inflation levels will be. If prices start to rise faster than anticipated, then central banks around the world may start considering raising interest rates from their current super-low levels sooner than they thought.
A number as several large investment banks have predicted that oil will hit $100 next year as China, India and other emerging economies compete with developed countries and tighten the world's oil supply.
Activity in the currency markets was similarly subdued though traders continued to keep a close watch on the dollar's value against the yen. The Japanese currency has risen on nine of the last ten days against the dollar, to the chagrin of the country's exporters _ a higher yen makes it more difficult for them to compete in international markets.
Neil Mellor, senior currency strategist at Bank of New York Mellon, said drawing inferences from what is going on at this time of year is best avoided but added that the recent price action could be a taste of things to come.
"Should the yen's value against the dollar continue on its recent tack, then the first ten days of the New Year could well oblige the Japanese ministry of finance to instigate the first talking point of 2011," said Mellor.
Last September, the Bank of Japan bought dollars and sold yen for the first time in six years in the hope of putting a ceiling, at the very least, on the yen appreciation.
By late morning London time, the dollar was 0.4 percent lower at 82.08 yen while the euro was flat at $1.3122.
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AP Business Writer Kelvin Chan in Hong Kong contributed to this report.


Updated : 2021-06-22 23:02 GMT+08:00