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In recent weeks there have been a number of concerns that China is entering a credit crunch, but today the actions of the People’s Bank of China gave a boost to the Asian equity markets and the increase in confidence spilled over to the London market today. The Chinese economy is no longer expanding at double digit levels and some economists are concerned the country’s banking system is over-stretched. The cash injection could increase economic output.
It has been a busy morning in terms of corporate announcements. Barclays reported a 17% decline in half-yearly profits, as provisions for mis-selling payment protection insurance (PPI) and interest rate products hit the company’s bottom line. The share price is down 7%. BP is in the red after the oil giant stated the compensation claims for the Gulf of Mexico disaster will be ‘significantly higher’ than originally estimated. The share price is down 4.5%.
At 2pm (London time), the US will announce the Case Schiller house price index. Economists are expecting a 12.4% increase on the year, and if the report is strong it could indicate a tapering of the stimulus package.