China Lifts Interest Rates to Slow Economy

[tocqueville]

By CHARLES HUTZLER, Associated Press Writer
7 minutes ago

BEIJING - China's central bank raised interest rates Thursday in the government's strongest move yet to cool an economy verging on overheating. The news sent resource stocks, oil and commodity prices lower around the world.

The People's Bank of China raised the minimum rate banks charge on one-year loans in local currency, the yuan, 27 basis points, to 5.85 percent. The increase, which goes into effect Friday, was the first since October 2004 when the central bank raised the lending rate the same amount.

Oil prices, which surged in recent months in part on growing demand from China, fell and shares of mining companies tumbled as traders bet that the growing demand for copper, steel and other commodities fueled by China's rapid expansion could slow
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But as traders concluded that the rate increase had little implication for China's currency policy, the dollar recovered to 114.85 yen. By the end of the day in New York, the dollar retreated again, after new Federal Reserve Chairman Ben Bernanke appeared to pave the way for a pause in a string of interest rate hikes.

http://news.yahoo.com/s/ap/20060427/ap_on_re_as/china_economy_6