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Bay Street rejoices as China keeps rates down

The Toronto stock market closed higher yesterday with investors feeling relieved that China is not raising interest rates to deal with high inflation.

The Toronto stock market closed higher yesterday with investors feeling relieved that China is not raising interest rates to deal with high inflation.

Positive economic news also gave a lift to the loonie. Statistics Canada reported that Canadian industries operated at 78.1 per cent of production capacity in the third quarter, up from 76.9 per cent in the second quarter. The agency said the improvement was driven by the manufacturing sector.

Investors had been concerned going into this past weekend that China would raise interest rates to deal with inflation that surged to a 28-month high of 5.1 per cent in November.

That again raised worries that the country’s economy could slow. But instead, the central bank ordered another increase in banks’ capital reserves on Friday in its latest move to reduce excess liquidity.

Traders were also encouraged by the outcome of China’s annual economic planning meeting, where leaders affirmed their determination to fight inflation while also keeping growth on track.

 
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