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Markets open higher on China stimulus hope

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The FTSE 100 and European stockmarkets have risen in early trades on the back of hope that China will move to stimulate its economy.

By 0832 BST, the FTSE 100 was ahead 0.5 per cent to 6,656.12, while the Euro Stoxx 50 was also up 0.5 per cent to 2,739.14. France’s Cac 40 and the German Dax also rose immediately after opening.

Investor confidence has been buoyed by comments from Chinese premier Li Keqiang, who said the slowest growth policymakers in the world’s second largest economy will tolerate is 7 per cent. Analysts believe a cut to Chinese banks’ reserve requirement ratio would be the first move to help the economy.

Sentiment was also improved by an unexpectedly drop in the sales of previously owned homes in the US, while helped to reassure that the Federal Reserve is unlikely to scale back its $85bn-a-month bond-buying programme any time soon.

CMC Markets senior market analyst Michael Hewson says: “Some positive chatter about further easing in China, in the form of a triple R cut, after Chinese premier Li put a floor under growth at 7 per cent has helped push Asia markets higher and this looks likely to feed through into a positive open this morning.”

In Asia, the Nikkei 225 added 0.82 per cent overnight to close at 14,778.51 while the Shanghai Stock Exchange Composite advanced 1.95 per cent to 2,043.88. The Hang Seng was up 2.42 per cent to 21,934.62 at 0836 BST.

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