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Shares in Hong Kong, Shanghai close higher


asia stock marketShares in Hong Kong and mainland China rallied Monday after Beijing announced another interest rate cut, while a strong US jobs report also provided support.

Hong Kong’s benchmark Hang Seng Index added 0.51 percent, or 140.86 points, to 27,718.20 on turnover of HK$130.97 billion (US$16.90 billion). Shanghai surged more than three percent.

The People’s Bank of China cut rates Sunday by 25 basis points — after two similar moves since November — in its latest bid to kickstart the Asian economic giant, which grew last year at its slowest pace in a quarter of a century.

The move also comes after two reductions this year in the amount of cash banks must keep in reserve.

It followed more weak data last week that showed April inflation undershooting forecasts and exports unexpectedly falling.

The announcement added to upward momentum provided by data Friday showing the US economy added 223,000 jobs in April and unemployment fell to a seven-year low 5.4 percent.

While the growth was not as much as expected, analysts say it was strong enough to suggest the economy was picking up — but not enough that the Federal Reserve would feel comfortable raising interest rates soon.

The Dow rose 1.49 percent, the S&P 500 jumped 1.35 percent and the Nasdaq was up 1.17 percent.

Among the big gainers was Tencent, which rose 2.99 percent to HK$158.60, while Lenovo added 4.08 percent to HK$30.60 and CNOOC gained 1.42 percent to HK$12.86.

However, HSBC fell 1.05 percent to HK$75.75 and China Mobile eased 0.46 percent to HK$107.70.

In mainland China the benchmark Shanghai Composite Index jumped 3.04 percent, or 127.66 points, to 4,333.58 on turnover of 715.2 billion yuan ($117.0 billion).

The Shenzhen Composite Index, which tracks stocks on China’s second exchange, gained 4.48 percent, or 101.75 points, to 2,373.92 on turnover of 668.7 billion yuan.

“The A-share market is very policy sensitive and this type of announcement tends to have a double effect — the actual effect of the interest-rate cut by itself as well as the signalling effect,” Gerry Alfonso, Shanghai-based trader at Shenwan Hongyuan Group, told Bloomberg News.

Policymakers still have “considerable room for policy easing and stimulus”, he added.

Insurance companies were among the biggest winners on Monday. On the Shanghai market, New China Life Insurance surged 7.93 percent to 65.63 yuan and China Pacific Insurance gained 3.05 percent to 35.49 yuan.

China’s oil giants also rose in Shanghai. PetroChina gained 2.01 percent to 12.66 yuan while Sinopec advanced 1.98 percent to 7.73 yuan.

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