HONG KONG - Asian markets rallied Monday after China's surprise move last week to cut interest rates for the first time in more than two years as its leaders try to strengthen growth.
Asian markets have rallied after China's surprise move last week to cut interest rates for the first time in more than two years as leaders try to kickstart growth in the Asian economic giant
The euro struggled following a sell-off Friday in response to comments from the head of the European Central Bank hinting at further stimulus measures to fight off deflation.
Shanghai rose 1.85 percent, or 46.09 points, to end at 2,532.88 while in late trade Hong Kong was up 1.90 percent.
Sydney added 1.08 percent, or 57.5 points, to 5,361.8 and Seoul ended 0.70 percent higher, tacking on 13.70 points to 1,978.54.
Tokyo was closed for a public holiday.
China's central bank on Friday evening announced it would slash its one-year rate for deposits by 25 basis points to 2.75 percent, and its one-year lending rate by 40 basis points to 5.6 percent, both effective Saturday.
The move -- the first cut since July 2012 -- followed a series of disappointing data from the world's number two economy, a key driver of global growth.
Last week banking giant HSBC said its index of manufacturing activity in China showed the sector had stagnated in November, while other data on trade and industrial output have also highlighted weakness.
"This provides confidence that growth won't fall below seven percent," said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors.
"Some of the rally this year has been a removal of cheap valuations. The next leg of the rally will probably come from confidence that growth is not going to collapse," Oliver told Dow Jones Newswires.
US shares rallied on the news. The Dow climbed 0.51 percent and the S&P 500 gained 0.52 percent-- both ending at new record highs -- while the Nasdaq added 0.24 percent.
- Euro struggles -
Also providing buying support was a suggestion from ECB head Mario Draghi that he is ready for further stimulus to boost the flagging eurozone economy.
He told a banking congress Friday the ECB "will use all means available to us, within our mandate, to return inflation towards our objective -– and without any undue delay".
Among the measures being considered are the large-scale purchase of government bonds -- known as quantitative easing -- similar to that undertaken by the Bank of Japan and recently wound down by the US Federal Reserve.
The bank is struggling to fend off deflation in the currency bloc with inflation currently at just 0.4 percent, well below the ECB target of 2.0 percent.
Draghi's comments hit the euro, which fell to 145.91 yen and $1.2405 late Friday from 147.81 yen and $1.2553 beforehand. In Asian trade Monday it was sitting at 146.02 yen and $1.2396.
The dollar bought 117.83 yen against 117.63 yen Friday
In oil markets US benchmark West Texas Intermediate for January delivery was up 31 cents at $76.82 a barrel in afternoon trade, and Brent crude for January added 37 cents to $80.73.
Gold was at $1,200.05 an ounce, compared with $1,196.81 late Friday.
In other markets:
-- Taipei rose 0.34 percent, or 30.80 points, to 9,122.33.
Taiwan Semiconductor Manufacturing Co. was unchanged at Tw$138.5 while Hon Hai Precision Industry was 0.21 percent higher at Tw$96.5.
-- Wellington eased 0.44 percent, or 24.13 points, to 5,471.68.
Contact Energy was down 1.09 percent at NZ$6.33 and Fletcher Building shed 1.19 percent to NZ$8.30.