Thursday, December 1, 2011

China shares open up 2.5 pct after bank reserve requirement cut

SHANGHAI (Dec 1): China's benchmark stock index opened 2.5 percent higher on Thursday, with banking stocks up sharply, after the central bank announced a cut in banks' reserve requirement ratios (RRR) in a reversal of its recent tight monetary policy stance.

The benchmark Shanghai Composite Index opened at 2,392.5 points, reversing a 3.3 percent fall on Wednesday and a monthly decline of 5.5 percent in November, with top lender ICBC rising 1.4 percent.

The People's Bank of China announced a 50-basis-point RRR cut after the market closed on Wednesday, which will take effect on Dec. 5, a policy shift to ease credit strains and shore up an economy running at its weakest pace since 2009.

The policy change came just hours before coordinated action by major central banks, including the Federal Reserve and the European Central Bank, to ease credit strains in world markets buffeted by the euro zone debt crisis.

U.S. stocks surged on the news on Wednesday, with the Dow Jones industrial average closing up 4.24 percent.- Reuters

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