Iron ore extends gains on rising bets of more China stimulus
BEIJING, Nov 5 (Reuters) -Iron ore futures rose for a second straight session on Tuesday, underpinned by growing optimism about more stimulus from top consumer China, although fundamentals of the key steelmaking ingredient remained weak.
The most-traded January iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 climbed 2.59% to 791.5 yuan ($111.41) a metric ton, as of 0248 GMT, the highest since Oct. 30.
The benchmark December iron ore <SZZFZ4> on the Singapore Exchange added 1.09% at $105.05 a ton, the highest since Oct. 17.
Chinese lawmakers reviewed a cabinet bill that would raise ceilings on local government debt to replace existing hidden debt as the standing committee of China's top legislature started itsmeeting on Monday, state media Xinhua reported.
That was interpreted by the market as a positive sign, as the heavy burden of local government debt has weighed on investment and economic growth.
"Expectations are rising that this week's meeting of the National People's Congress Standing Committee will provide new details of fiscal stimulus measures," ANZ analysts said.
Reuters exclusively reported last week that China is considering approving new debt issuance of more than 10 trillion yuan to tackle hidden local government debt, fund buybacks of idle land and reduce a giant inventory of unsold flats.
China's services activity expanding the fastestin three months in October, following the unexpected manufacturing activity expansion, has further boosted overall sentiment.
Other steelmaking ingredients on the DCE gained, with coking coal DJMcv1 and coke DCJcv1 up 2.17% and 2.27%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange were higher. Rebar SRBcv1 added 1.56%, hot-rolled coil SHHCcv1 advanced 1.6%, wire rod SWRcv1 ticked up 0.49% while stainless steel SHSScv1 was flat.
Analysts at Galaxy Futures, however, are not too optimistic about the benefits of the expected fiscal policy to steel demand, saying that even if it's introduced, it's expected to be mainly used in dissolving debts, supplementing bank capital and consumption.
($1 = 7.1047 Chinese yuan)
Reporting by Amy Lv and Mei Mei Chu; Editing by Sumana Nandy
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