Asian stock markets spurred by China interest rate cut

Staff Writer
Columbus CEO

HONG KONG (AP) — Chinese stocks led Asian benchmarks higher Monday after the country's central bank cut interest rates for the third time in six months, hoping to reinvigorate waning growth in the world's No. 2 economy.

KEEPING SCORE: The Shanghai Composite Index in mainland China jumped 2 percent to 4,292.75 and Japan's Nikkei 225 rose 1.3 percent to 19,625.15. South Korea's Kospi gained 0.7 percent to 2,10176 and Hong Kong's Hang Seng added 0.6 percent to 27,738.13. Australia's S&P/ASX 200 dipped 0.1 percent to 5,629.10. Markets in Southeast Asia also rose.

CHINA CUT: On Sunday, the People's Bank of China cut interest rates for the third time in half a year in a fresh bid to shore up sputtering economic growth. The central bank's latest move came after trade data released on Friday showed imports and exports declined in April suggesting domestic and foreign demand are slowing. At the same time, inflation remains low, giving policymakers leeway to ease monetary policy as they strive to keep growth from falling below a 7 percent target.

THE QUOTE: With their latest easing move, China's policymakers are trying to walk a fine line between stimulating the economy and avoiding adding even more froth to China's stock market, which has more than doubled in the past year, analysts said. "It's only a quarter percent cut, which on one hand leaves room for a lot more aggressive move," said Nicholas Teo, analyst at CMC Markets in Singapore. "On the other hand we've seen potential for asset inflation in the market itself, so I think they came out with the best they could at this point in time and maybe buy themselves a bit more time."

WALL STREET: The U.S. stock market ended last week with its best day in two months on good news about the job market. The Dow Jones industrial average jumped 1.5 percent to close at 18,191.11 while the Standard & Poor's 500 added 1.4 percent to 2,116.10, its biggest gain since mid-March. The Nasdaq composite rose 1.2 percent to 5,003.55.

ENERGY: Benchmark U.S. crude slipped 20 cents to $59.19 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 45 cents to close at $59.39 a barrel on Friday. Brent crude added 11 cents to $66.27 in London.

CURRENCIES: The dollar strengthened to 119.96 yen from 119.79 in late trading Friday. The euro slipped to $1.1141 from $1.1223.