China will cut state-set fuel prices for the first time since July, the government said Thursday, further easing inflationary pressure.

The benchmark price for petrol will drop 3.5 percent to 8,530 yuan ($1,376) per tonne while diesel will fall 3.7 percent to 7,720 yuan ($1,245) per tonne from Friday, the National Development and Reform Commission said.

The cut will see petrol prices at the pump fall by 0.23 yuan per litre and diesel by 0.26 yuan per litre, in reflection of declining international crude prices, the top economic planning body said in a statement.

The commission said international crude prices had trended down since it last raised domestic fuel prices in September, due to worries over the US economy and a slow recovery in the global economy.

The agency can adjust fuel prices when international oil prices move by more than four percent over a 22-working day period.

China is the world's second largest consumer of oil, but the government keeps a tight lid on domestic retail prices of fuel, in part to ease social discontent.

China's inflation rate slipped to a nearly three-year low in October, leaving the authorities with room to take more steps to boost the recovery in the world's second-largest economy.

The consumer price index rose 1.7 percent year-on-year in October, compared with an increase of 1.9 percent in September.

Crude higher in Asian trade
Singapore (AFP) Nov 15, 2012 - Oil turned higher in Asia on Thursday as tensions in the oil-rich Middle East escalated following the death of three more Palestinians in Gaza from a fresh Israeli air strike, analysts said.

New York's main contract, light sweet crude for delivery in December, gained four cents to $86.36 a barrel in the afternoon and Brent North Sea crude for December delivery added 27 cents to $109.88.

Israel's military launched operations Wednesday with the killing of a top Hamas commander followed by what Palestinians said were at least 60 Israeli air strikes. The toll in Gaza Thursday rose to 11 dead and at least 100 wounded.

The attacks provoked militants to warn the Jewish state that it had opened "the gates of hell", while Egypt said it was recalling its ambassador to Israel in protest.

"Crude oil prices rose... after Israel launched an offensive against Palestinian militants in Gaza," Phillip Futures said in a report.

The United Nations will meet in an emergency session later Thursday to try to defuse tensions in the region.

Israel however said this was only the start of an operation targeting militant groups in Gaza, which comes as it prepares for general elections in January.

A weekly report late Wednesday by the American Petroleum Institute showed crude stocks in the world's largest oil consumer rising 1.3 million barrels last week, indicating weak demand.

This was less than analyst projections of a 1.9 million-barrel gain, but was not enough to reassure traders' fears of slipping US energy demand.