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China economy hopes give world markets a boost

December 10, 2022 00:00:00

LONDON/SYDNEY, Dec 9 (Reuters): World stocks rose on Friday on expectations China's economy would strengthen as COVID-19 curbs ease, but stocks were heading for a 2 per cent weekly loss in nervy markets ahead of the Federal Reserve's policy meeting next week.

US S&P futures were up 0.18 per cent, while European stocks were steady.

China's Premier Li Keqiang, in comments carried by state media, said on Thursday the country's shift in COVID-19 policy would allow the economy to pick up pace, a day after a top-level party meeting pledged to focus on stabilising growth while optimising pandemic measures.

Fed policymakers meet next week and are likely to announce a 50 basis point hike in the U.S. central bank's lending rate, while indicating a slower pace of future rate hikes.

"The market is very much focused on what the Fed is going to do on Wednesday, no one wants to take on any big positions," said Giles Coghlan, chief currency analyst at HYCM, though he added that Chinese stocks were helped by the fact that China had "made that COVID pivot".

The MSCI world equity index rose 0.22 per cent, while MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.2 per cent, edging closer to a three-month high hit earlier in the week.

Japan's Nikkei climbed 1.2 per cent. Britain's FTSE lost 0.2 per cent to an 11-day low, hurt by energy stocks.

Hong Kong's Hang Seng index jumped 2.3 per cent to three-month highs, with mainland developers (.HSMPI) up a whopping 9.9 per cent to a four-month high. Chinese blue chips rose 1 per cent to their highest in nearly three months.

The world's largest investment banks expect global economic growth to slow further in 2023 following a year roiled by the Ukraine conflict and soaring inflation, which triggered one of the fastest monetary policy tightening cycles in recent times.

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