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Updated Friday, April 2, 2010 10:33 am TWN, By Weiyi Lim, Bloomberg

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Taiwan's stock index to rise 28 percent: SinoPac

China's government will spur sales of automobiles and home appliances to rural areas this year, taking another step to boost domestic consumption and maintain the economy's growth at eight percent, the government said this month. An Economic Cooperation Framework Agreement to reduce trade tariffs and encourage cross-border investment may be signed by the end of the first half, Ma said March 16.

The Reserve Bank of India on March 19 unexpectedly raised its benchmark interest rates, saying containing consumer prices has become “imperative” after the wholesale-price inflation rate reached a 16-month high of 9.89 percent last month.

India followed Australia and Malaysia in lifting borrowing costs this month, while Norway and Israel did so at the end of last year, as the global economy recovered from the worst recession since World War II.

Lagging behind India are central banks in the Group of Seven economies with the Federal Reserve and European Central Bank among those waiting for evidence of a more concrete recovery before they raise record low borrowing costs. Canada may be the first G-7 central bank to shift after data showed its core inflation rate unexpectedly accelerated last month.

Taiwan may also begin withdrawing monetary stimulus this week to cool asset-prices, while keeping interest rates unchanged, Goldman Sachs Group Inc. and JPMorgan Chase & Co. said. There is a “chance of a hike” in the reserve requirement ratio back to mid-2008 levels, Goldman Sachs said in a report.

“There will be more certainty in the second half,” Fubon Asset's Fu said.

Huei Ling Yu, president of Jih Sun S.I.T., expects Taiwan's central bank to raise rates only in the second half at a slow pace amid the economic recovery, as “investors are most worried about uncertainty.” She wasn't more specific about the anticipated rate increases.

Governor Perng Fai-nan and his board will leave the discount rate on 10-day loans to banks at a record-low of 1.25 percent at a policy meeting on March 25, according to all nine economists surveyed by Bloomberg.

“With economies in Europe and the U.S. probably recovering, we expect to see Taiwan shares to rise in the next two to three years,” said IBT Asset's vice president Hsiao Chuang Kang.

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