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China Swaps Jump Most in 4 Months on Signs Recovery Quickening

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Jan. 4 (Bloomberg) -- China’s interest-rate swaps jumped by the most in four months after factory and services data signaled signs a recovery in the world’s second-largest economy is gathering pace.

Gross domestic product will rise 8 percent in 2013, the Securities Times reported today, citing researchers from the State Information Center, the Ministry of Finance, the State Council and the National Development and Reform Commission. That compares with the median forecast of economists surveyed by Bloomberg for 7.7 percent growth last year.

“Recent data from China confirmed the economy continued to expand,” sending swaps higher, said Frances Cheung, a strategist at Credit Agricole CIB in Hong Kong.

The one-year swap, the fixed cost to receive the seven-day repurchase rate, increased 12 basis points, or 0.12 percentage point, to 3.46 percent from Dec. 31 in Shanghai, according to data compiled by Bloomberg. It was the biggest gain since Aug. 20. Markets in China were closed for the past three days for public holidays and will open over the weekend.

The People’s Bank of China gauged demand for a possible sale of five-day reverse-repurchase agreements scheduled for tomorrow, according to a trader who asked not to be identified. The PBOC normally auctions seven-, 14- and 28-day contracts on Tuesdays and Thursdays.

PMIs Expand

China’s new home prices rose for a seventh month, according to SouFun Holdings Ltd. Prices in December climbed 0.23 percent from November to 9,715 yuan ($1,559) per square meter (10.76 square feet), the country’s biggest real estate website owner said in a statement today, based on its survey of 100 cities.

The nation’s Purchasing Managers’ Index of manufacturing was at 50.6 in December, a third monthly expansion, according to a report from the National Bureau of Statistics and Federation of Logistics and Purchasing on Jan. 1. A gauge for services industries was 56.1 last month versus 55.6 in November, data showed yesterday. A reading above 50 indicates expansion.

The seven-day repo rate, a measure of interbank funding availability, declined 54 basis points to 4.04 percent in Shanghai, according to a weighted average compiled by the National Interbank Funding Center.

To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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