China cuts fuel price in new stimulus move

China cut state-set gasoline and diesel prices for the second time in a month on Friday amid mounting government efforts to reverse a sharp slowdown in the world's second-largest economy.

The reduction came after an interest rate cut Thursday — the country's first in nearly four years — prompted analysts to suggest data due this weekend will show May trade and industrial activity was even weaker than pessimistic forecasts suggested.

"Markets are bracing for a potentially bad set of May economic data for China," said Moody's Analytics economist Alaistair Chan in a report.

Beijing is unveiling new measures almost daily to shore up growth that slowed to 8.1 percent in the first quarter and is expected to decline further. It is promising to pump money into the economy through more spending on construction of airports and other public works and to encourage corporate investment.

The slowdown, which raises the risk of job losses and unrest, comes at an awkward time for the ruling Communist Party, which is trying to enforce calm ahead of a once-a-decade handover of power to younger leaders.

The fuel price cut will reduce the retail cost of the most commonly used grade of gasoline by 0.43 yuan (7 U.S. cents) per liter effective Saturday, according to the country's planning agency, the National Development and Reform Commission.

That would amount to a cut of just over 5 percent in Beijing, which has some of China's highest prices, to 7.64 yuan ($1.21) per liter. Other areas with lower retail prices would get a bigger reduction in percentage terms.

Also Thursday, the central bank said banks will be allowed for the first time to pay higher rates on deposits than the government benchmark. The move might help to boost consumer spending by shifting more money to households.