China Soothe fears with interest cut

Shanghai shares rose on Wednesday, with early choppy trading easing after an interest rate cut in China began to soothe fears about stalling growth and arrest the crisis that has rattled global markets. The central bank reduced interest rates and slashed the amount of money banks need to hold in reserve on Tuesday in a bid to bolster its economy and end the worst stock market rout in almost two decades.

China is the world's second-largest economy and top trading nation, so signs it is slowing have sent financial markets into turmoil, particularly when the US Federal Reserve is expected to raise interest rates in the next few months.

The cuts initially fuelled a rebound in global equities, with European shares surging after their heaviest losses since the 2008 financial crisis on Monday as panic about China gripped world markets.

But the optimism fizzled by the end of US trading, with Wall Street finishing in negative territory after strong early gains, as the spectre of a hard landing in the world's number two economy returned.

Despite volatile early trading in Shanghai that saw China's benchmark index fall as much as 3.85 percent and rise as much as 1.24 percent, Phillip Securities analyst Chen Xingyu said some calm had returned.

"In all, the central bank's move has helped with the market sentiment today, despite the current volatility," he told AFP.

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