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China central bank lowers guidance on seven-day reverse repo

A fluttering Chinese national flag casts its shadow on the headquarters of the People's Bank of China, China's central bank, in central Beijing November 24, 2014. REUTERS/Kim Kyung-Hoon

SHANGHAI (Reuters) - China's central bank on Tuesday cut its guidance on the benchmark 7-day reverse repurchase (repo) agreement for the fifth time since the Chinese New Year in February, traders said.

The 10-basis-point cut brings the central bank's new guidance rate to 3.35 percent.

The central bank adopts these moves as a way of signalling to the money market to lower short-term rates, which had remained unusually high after the holiday, and by extension easing funding pressure more generally as economic growth slows.

Short term money market rates have now moved down sharply by nearly 100 basis points since mid March.

The benchmark seven day repo rate opened at 2.81 percent, 47 basis points below the previous close of 3.28 percent.

(Reporting By Nathaniel Taplin; Editing by Shri Navaratnam)