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China's central bank raised rates for the second time in a month, surprising investors who weren't expecting it to move on the final day of the Lunar New Year holiday.

The move hit stocks as well as base metals and oil, commodities which are likely to be hurt the worst if Beijing doesn't succeed in taming inflation and engineering a soft landing for its fast-growing economy.

The People's Bank of China announced Tuesday that its benchmark one-year deposit rate would rise a quarter percentage point to 3 percent and the one-year lending rate would increase by the same amount to 6.06 percent, effective Wednesday. Its last rate hike came on Christmas Day, when the bank raised both rates by a quarter point as well.

Inflation jumped to a 28-month high of 5.1 percent last November, worrying leaders who fear that a sharp rise in living costs could trigger unrest. Inflation has been sticking well above the government's target of 3 percent. This is China's third rate hike since October.

Investors had been expecting China to tighten rates, but the timing came as a surprise. China is expected to release a report next week showing consumer prices rose 5.3 percent in January, according to the median estimate in a Bloomberg News survey of economists.

The FTSEurofirst 300 index was down 0.3 percent, turning negative after China's move. Emerging stocks were down 0.15 percent on the day. China is closed for the Lunar New Year holidays. U.S. stock futures were little changed.

U.S. crude oil fell 1.2 percent to $86.38 (U.S.) a barrel. Higher interest rates may act to tame oil demand growth in China, which recently overtook the United States as the largest energy consumer in the world.

Benchmark copper on the London Metal Exchange slid to $9,950 a tonne, falling through the $10,000 milestone it achieved last year and down from a close of $10,045 on Monday. (The price you see on Globe Investor is the Comex price, in cents per pound.)

Tin, which earlier on Tuesday touched a fresh peak of $31,650 a tonne, slipped to $31,220 per tonne.

Gold bucked the trend to edge higher, as a safe-haven asset. Spot gold gained 0.2 percent at $1,353.40 an ounce, set for a second consecutive weekly rise but still 5 percent below record highs struck in mid-December.

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