Help for Aussie dollar from China, oil

By Patrick Graham

LONDON (Reuters) - The Australian and New Zealand dollars were the only big movers on major currency markets on Tuesday, buoyed by steadier oil prices and hopes of more official action to support growth in China.

The dollar, yen, euro and sterling were all tied down in tight ranges with dealers and analysts increasingly confident of ruling out further big moves before the end of the year in sagging volumes of trade.

The Aussie and kiwi were both around half a percent higher, while China's yuan was marginally higher against the dollar for a second day, halting falls that have taken it to its weakest since a devaluation in August.

Michael Sneyd, a strategist with BNP Paribas in London, pointed to signs of more stability in the last few days in prices of Australia's biggest export, iron ore, despite a 2 percent fall in Shanghai prices on Tuesday.

"China and oil are factors this morning. What has been quite important for the Aussie is the bottom that has begun to form in iron ore over the past few days," he said.

Still, the contrast between a 35 percent fall in prices of iron ore since September, and a 4 percent gain for the Aussie in the same period, are at the heart of calls by BNP and others for the Australian currency to fall at the start of next year.

"The Aussie has remained at about the same level despite the rise in U.S. yields and fall in iron ore over the past 3 months. It should be down at 67-68 at the moment," Sneyd said.

Wrapping up a key meeting of China's Communist leadership, the government announced a series of reforms, including plans to make China's monetary policy more flexible and to expand the government's budget deficit next year.

In the daily fixings of the yuan this week, Beijing has halted the steady depreciation of the yuan since early December. On Tuesday, offshore rates were around 0.2 percent higher at 6.5365 yuan per dollar.

"As expected, the authorities have put a halt to things after that two-week run," said the head of FX trading with one London-based hedge fund. "A lot of people were hurt by the ECB meeting (on Dec. 3) and on the majors that really does seem to be it for this year."

The euro traded at $1.0914 after another blip higher in U.S. trading on Monday.

The dollar inched down 0.1 percent to 121.08 yen , having spent the previous day in a narrow range of 121.16-121.50.

(Editing by Raissa Kasolowsky)