Photographer: David Paul Morris/Bloomberg

Charting the Markets: Yuan Sets Four-Year Low

Mining stocks and commodities rattled again, and BASF gains on Dow Chemical-Dupont talks.

Today's inflation figures from China haven't unsettled markets like yesterday's trade data, which prompted the biggest sell-off in global stocks in almost a month. Consumer prices rose a bigger-than-forecast 1.5 percent in November, signaling demand is strengthening in the world's second-largest economy. Producer prices sank for a record 45th month. The MSCI All-Country World Index is little changed after dropping 1 percent on Tuesday.

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China's yuan sank to the lowest level since August 2011 after the central bank cut the currency's reference rate. According to Bloomberg Intelligence the move is an attempt to release pent-up depreciation pressure ahead of next week's Federal Reserve meeting, which is likely to conclude with a U.S. rate hike for the first time in almost a decade. The People's Bank of China cut the yuan's fixing - which limits onshore moves to 2 percent on either side - by 0.1 percent to 6.4140 a dollar. Since China devalued the yuan on Aug.11 - by cutting the reference by 1.86 percent - the currency has sunk 3.3 percent, helped in part by its recent elevation to IMF reserve currency status. 

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Global mining stocks resumed their sell-off after the biggest one-day drop in over three months. The Bloomberg World Mining Index - a gauge of the world's 80 biggest mining companies - sank almost 4 percent on Tuesday after weak China trade data. Yesterday's slump was compounded by news Anglo American is scrapping its dividend and slashing two-thirds of its workforce to counter a slump in commodities. Anglo shares have fallen a further 14 percent today after sinking 12 percent yesterday. The Bloomberg Commodity Index - which tracks 22 materials - has rebounded from yesterday's lowest close in 16 years. Crude oil has bounced back from its lowest close since February 2009. It finished Tuesday's session at $37.51 in New York, bringing the three-day decline to almost 9 percent.

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BASF shares reieved an early boost, before falling back, after news emerged Dow Chemical and DuPont are in late-stage talks to merge. A combination between the two would be the largest in the chemicals industry and create the world's second-biggest company in the industry, behind Germany's BASF. It would also be the world's largest seed and pesticide company. The global crop-chemicals business is buzzing with mergers and acquisition activity. This year Switzerland's Syngenta has rejected takeover offers from Monsanto and ChemChina. Syngenta shares are also gaining.

Mark Barton is a presenter on Bloomberg TV. Follow him on Twitter @markbartontv 

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