* Muted reaction to China's 25 bps weekend rate hike
* Aussie dollar on defensive; commodities edge lower
* China stocks higher as banks, insurers get a boost
By Vikram S.Subhedar
HONG KONG, Dec 27 (Reuters) - The Australian dollar and
commodity prices slid on Monday following an interest rate
hike by China's central bank over the Christmas weekend, but
volumes were light due to holidays in the final week of 2010.
Asia shares also tended lower in modest trade, with the
MSCI index of Asian stocks outside Japan
trading 0.12 percent down, dragged by a 0.3 percent drop in
South Korea's KOSPI . Other major markets such as Hong
Kong and Australia remained closed for the holidays.
On Saturday, the People's Bank of China raised rates by 25
basis points, the second rate rise in just over two months,
part of a series of measures designed to combat inflation
which hit a 28-month high of 5.1 percent in November.
[]
China's move was a "fitting end to the year and great
prelude for 2011 given the wide span of financial reforms
expected in China", said Geoff Howie, sales and markets
strategist at MF Global in Singapore.
"Expect Asian markets to be tempered into the last trading
week of the year. The cautious tone and lower turnover this
month compel the case for further consolidation," said Howie.
* The Australian dollar slipped in early trading
on expectations that more tightening by China could prompt
investors to sell the Aussie after the year-end break. The
currency was down 0.1 percent in thin trade with many key
centres in the region, including Sydney and Hong Kong, on
holiday.
* Crude oil futures <CLc1> fell, easing towards $91 a
barrel while U.S. wheat futures slid 0.7 percent, falling from
a 4-1/2 month top, while soybeans and corn also lost ground.
But losses in the grain markets were limited by bullish
fundamentals of tightening supplies and strong global demand.
Spot gold eased 0.4 percent.
* China's key stock index was trading 0.5 percent
higher with banking and insurance shares rising on
expectations that higher benchmark rates will support their
earnings. []
* Japan's Nikkei rose 0.5 percent, extending its
recent over performance versus other Asian markets. The Nikkei
is up about 10 percent since then versus a 2.7 percent rise
for the MSCI Asia ex-Japan index.
* S&P futures <SPc1> fell 0.4 percent.
(Editing by Miral Fahmy)
* For Reuters Global Investing Blog, click on
http://blogs.reuters.com/globalinvesting
* For the MacroScope Blog, click on
http://blogs.reuters.com/macroscope
* For Hedge Fund Blog, click on
http://blogs.reuters.com/hedgehub
