The Canadian dollar reversed a three-day losing streak Thursday, gaining half a cent tot 101.98 as commodity prices rose.

Prices rose in part amid expectations of a move by the Bank of China to ease a slowdown in the world's number two economy.

The loonie gained 0.48 of a cent to 101.98 cents U.S. early in the afternoon.

Benchmark New York oil for November delivery was ahead by $1.92 at $91.90 US a barrel, the December gold contract added $26.20 to $1,779.80 an ounce and the December copper contract rose four cents to $3.75 a pound.

The expectations for a move by China were actually based on negative news.

The country’s National Bureau of Statistics reported that profits among industrial companies fell for a fifth straight month in August, by 6.2 per cent from a year earlier.

'It's going to be painful for a lot of industries in China.' —Mark Williams, Analyst, Capital Economics

That helped prompt a rally in Hong Kong, which rose 0.5 per cent, and Shanghai, which gained 0.2 per cent.

China's biggest steelmaker, Baosteel Group, said Thursday falling demand has forced it to shut down a mill in Shanghai in a new sign of weakening growth in the world's second-largest economy, with signs that the country’s economy may report its slowest growth in 22 years this year.

"There are signs of severe overcapacity in steelmaking and other industries as well," Capital Economics analyst Mark Williams said.

"It's going to be painful for a lot of industries in China," said Williams.

"And the pain is going to be felt beyond China's borders because a lot of companies elsewhere in the world have prospered from selling commodities and capital goods to China. The outlook for them is not so rosy."

As well, the central bank injected a record 290 billion yuan ($45 billion Cdn) in cash into China’s banking system this week.

The move was likely triggered by expectations of a seasonal shortage of cash ahead of a national holiday which begins October 1, but investors took the action as a sign Beijing is prepared to add stimulus.

With files from The Associated Press