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Policymakers have in recent months announced a series of targeted measures as well as a major issuance of billions of dollars in sovereign bonds, aimed at boosting infrastructure spending and spurring consumption.

Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said: “China needs to take actions quickly and aggressively to avoid the risk of deflationary expectation to be entrenched among consumers.”

China slipped into deflation in July for the first time since 2021 and, apart from a brief rebound in August, prices have been in constant decline since.

Lynn Song, chief economist for Greater China at bank ING, said: “The primary drag on inflation continued to be food prices, which fell by 5.9 percent year-on-year, the lowest level on record.”

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What happened overnight 

Tokyo stocks surged driven by gains in tech shares, while a fresh central bank comment about maintaining an easy monetary environment encouraged buyers.

Japanese investment giant SoftBank Group reported a net profit of 950 billion yen (£5.1bn) for the final three months of 2023, returning to the black after four consecutive quarterly losses.

Hong Kong’s benchmark fell while Shanghai advanced after China replaced its top stock market regulator. 

Beijing has been struggling to prop up what have been some of the world’s worst-performing markets this year. Late Wednesday, China’s top stock regulator was replaced by a former chairman of the Shanghai Stock Exchange as part of those efforts.

Wu Qing, also a former banker and ex-vice mayor of Shanghai, has been dubbed the “broker butcher,” analysts say, due to his record for cracking down on market abuses such as insider trading.

The Shanghai Composite index gained 1.2pc to 23,862.31 and the Shenzhen Components index in China’s smaller main market surged 2.2%.

Hong Kong’s Hang Seng fell 0.9pc, to 15,941.66 on heavy selling of technology companies, despite strong gains for property developers.

Wall Street rose to the edge of another record-breaking milestone yesterday as Ford, Chipotle Mexican Grill and other big stocks climbed following their latest earnings reports.

The S&P 500 got within a fraction of a point of the 5,000 level before ending the day at 4,995.06. The index rose 0.8pc, to set another all-time closing high. The Dow Jones Industrial Average added 0.4pc, to 38,677.36, and the Nasdaq Composite index gained 0.9pc, to 15,756.64.

In the bond market, US Treasury yields held relatively steady. The yield on the benchmark 10-year Treasury bonds edged up to 4.11pc from 4.09pc late on Tuesday.

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