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Asia stocks, currencies up as China fuels reform hope

[HONG KONG] Hopes that China will implement fresh economic reforms lifted emerging-market currencies Tuesday and oil and metals prices saw a rare uptick, while most Asian stock markets extended the previous day's gains.

After a secretive policy meeting that ended Monday, China's economic planners said they would combat local government debt and push on with changes in the housing sector to try to shore up growth.

They also said they would "strengthen structural reforms" and monetary policy should be more flexible, state news agency Xinhua reported.

The announcement is the latest from Beijing after it promised last year to let the market play a bigger role in the world's number two economy and implement reforms of bloated state-owned enterprises.

It also follows other moves to kickstart slowing growth, including six interest rate cuts since November last year.

"We've had easing on multiple fronts in China and we are starting to see the green shoots of recovery there," Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors, told Bloomberg News.

"We should see China's economy turn the corner in 2016 and the US dollar peaking, which will have a powerful positive impact on commodities and related sectors." Currencies of countries that rely on trade with China climbed against the dollar. The Australian dollar rose 0.5 per cent, Indonesia's rupiah surged one percent, the Thai baht was 0.1 per cent higher and the Singapore dollar added 0.2 per cent. The South Korean won, Canadian dollar and Taiwan dollar also advanced.

The US dollar bought 121.22 yen compared with 123 yen last week. The euro continues to hold its own despite uncertainty in Spain after a general election left no party with a clear majority.

The possibility of Chinese stimulus measures also lifted commodities, with copper rising 1.1 per cent and iron ore surging more than three percent.

Oil, which has slumped more than 60 per cent since summer 2014, edged up after Brent hit an 11-year low Monday. Brent gained 0.7 per cent Tuesday and US benchmark West Texas Intermediate was 0.4 per cent up.

However, most analysts expect prices to remain subdued by a global supply glut, tepid demand, Opec's refusal to cut production and a strong dollar.

Regional stock markets fluctuated through the morning but mostly rebounded in the afternoon. Shanghai added 0.3 per cent by the close, Hong Kong edged up 0.1 per cent in the afternoon and Seoul ended 0.6 per cent higher.

However, Tokyo closed down 0.2 per cent, with Toshiba slumping 12.3 per cent - extending a more than nine per cent loss Monday - after it said late Monday it would book a record US$4.5 billion loss in the year to March and slash thousands of jobs.

The loss and layoffs are tied to a huge restructuring announced in the wake of revelations this year that company executives systematically pressured underlings to inflate profits to hide poor results.