By James Glynn SYDNEY--The Australian dollar was higher on Tuesday on news of a rebound in business conditions in December weakening the case for another interest-rate cut. National Australia Bank's monthly business-conditions index rose to plus-four in December from minus-three in November signaling a possible turning point for an economy weakened last year by a fading mining investment boom. There were improvements in trading conditions, corporate profitability and, to a lesser extent, hiring, the survey said. The trading conditions subindex jumped to plus-12 from plus-two supported by record-low interest rates, a rising stock market and house prices and steep falls in the Australian dollar last year helping exports. NAB's separate business-confidence index was unchanged in December at plus-six--also boding well for an upturn this year. At 0545 GMT the Australian dollar was trading at US$0.8776--up from US$0.8706 before the weekend. Australian markets were closed for a public holiday on Monday. "The Reserve Bank would be encouraged by the way the economic recovery is panning out. The low Australian dollar is helping with the structural rebalance across the domestic economy," CommSec chief economist Craig James said. The policy setting board of the Reserve Bank of Australia meets on Feb. 4 and is expected to keep its cash rate at a record low 2.50%. The Aussie dollar was stronger in spite of growing concerns about emerging-market economies--many of who have large external liabilities. In focus are Turkey, South Korea, Argentina, Russia and Brazil. "Concerns about emerging countries on the back of various political problems and trade imbalances that leave them vulnerable as the Fed slows down its monetary stimulus appear to have triggered a correction in share markets," AMP Capital chief economist Shane Oliver said. "While it makes sense to be cautious about emerging-market shares generally a rerun of the 1997-98 Asian crisis is unlikely and emerging markets are unlikely to pose a major threat to global economic recovery," Mr. Oliver added. Uncertainty in emerging markets won't derail the recovery in international growth, UBS Australia chief economist Scott Haslem said. "We believe the underpinnings of the global economic recovery remain in place and are unlikely to be dislodged by emerging vulnerabilities." "Recent market tumult, above all in emerging currencies, reminds investors that risks remain present. That's no bad thing following a period of uninterrupted gains in global equity markets," he added.

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