Aussie falls after China raises bank reserves ratio

LONDON Jan 12 (Reuters) - The Australian dollar fell sharply against the dollar and the yen on Tuesday after China announced it was raising banks' reserve requirements.

China's central bank on Tuesday said it was raising banks' reserve requirements by 0.5 percentage points, effective Jan. 18, in the clearest sign yet that it has begun to tighten monetary policy. [ID:nBJC002463]

The Australian dollar AUD=D4 fell more than 1 percent on the day to the day's low of $0.9218, from around $0.9270 beforehand. Traders sold the Australian dollar on speculation that China's move may slow a recovery in the global economy.

It AUDJPY=R fell around 1.3 percent on the day to 84.48 yen, compared with 84.92 yen before the announcement.

(Reporting by London Forex Team)