Markets cheered by Chinese currency revaluation hopes

US markets followed European and Asian markets higher at the open, boosted by Chinese pledges to allow its currency to move more freely against the dollar.

The DJIA was 106 points, or 1%, higher at 10,555 within ten minutes of the opening bell as the people’s bank of Chain move is expected to help level the playing field for US export orientated companies.

In Europe, indices were up between 1-1.5% but off earlier highs as early optimism was reined in and investors warn the impact will likely of any revaluation will be muted.

Mark Williams, senior China economist at Capital Economics, said yuan (or renminbi) gains are likely to be small over the rest of the year.

'We expect further sizeable movements in both directions this week with the overall shift towards a stronger renminbi. But once the G20 summit at the end of the week is out of the way, the pace of appreciation will likely slow,' he said.

While most agree the impact of the more liberal Chinese approach to its currency will be short-term and limited in the longer run, foreign exchange and commodity markets were boosted by hopes of a near-term spring higher by the yuan.

Gold touched an all-time high earlier and commodities traders now see the precious metal rising to $1300 in the next few weeks.

Platinum and Palladium prices also gained ground as Charles Stanley said the move must be seen as a bull factor for both metals.

The FTSE 100 was up 54.54 points, or 1.04%, at 5305.64.

Joshua Raymond, market strategist at City Index, said: 'The move was a bit of a surprise, and so naturally we have see a bit of a knee jerk reaction in the US dollar, which has fallen against a basket of currencies, whilst equities have traded largely positively with a higher demand for risky asset classes.'

Eight of the ten largest risers in London were mining companies.

Vedanta led the pack, up 5.96% at £24.70, followed by Rio Tinto and Xstrata up 5.31% at £35.02 and 5.21% at £10.80 respectively.