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Asian Markets Rise Amid Easing of Monetary Policy in China; Nikkei Jumps 3%

Investing.com - Asian markets rose in morning trade on Monday, with Japan’s Nikkei 225 jumping 3%, as an easing of monetary policy in China triggered a renewed appetite for risk assets.

The People's Bank of China (PBOC) cut the reserve requirement ratio for banks by 1% last Friday as Beijing hoped to stimulate lending after weaker-than-expected PMI data released last week suggested a slowing economy.

The cut will release a net 800 billion yuan ($117 billion) of liquidity, the central bank said in a separate statement, adding that the cut is still a "targeted" easing rather than wide-ranging stimulus.

"The PBOC is reacting to the recent deterioration of the economic environment," said Stefan Grosse, an economist at Nord LB in Hanover, Germany. "The weak PMI in China as well as the ISM PMI manufacturing in the U.S. point to a slowdown of the global economy. Expect more governmental stimulus to come."

The Shanghai Composite and the Shenzhen Component gained 0.4% and 1.1% by 9:05 PM ET (02:05 GMT) on Monday following the news.

Meanwhile, citing a person familiar with the matter, the South China Morning Post reported that U.S. President Donald Trump is likely to hold talks with Wang Qishan, China’s vice president, at the World Economic Forum later this month in Davos.

The meeting would follow another round of trade talks scheduled to start in Beijing on Monday between U.S. and Chinese officials.

Citing two person familiar with the preparations, Bloomberg said the talks would focus on issues including intellectual property, agriculture and industrial purchases. Preliminary discussions have been “a little more optimistic than usual,” White House economic adviser Larry Kudlow told Bloomberg on Friday.

While not a directional driver, data on Monday showed the Markit/Nikkei Japan Services Purchasing Managers Index (PMI) stood at 51.0 on a seasonally adjusted basis in December, down from 52.3 in November.

Elsewhere, South Korea’s KOSPI rose 1.2%.

Down under, Australia’s ASX 200 advanced 1.4% as shares of major miners traded up; Rio Tinto Ltd (AX:RIO) was up 2.5%, Fortescue Metals Group Ltd (AX:FMG) gained 2.4% and BHP Billiton Ltd (AX:BHP) jumped 3.1%.

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