China stocks surge over 3 pct, PBOC says "correction is almost over"
SHANGHAI Oct 12 (Reuters) - China shares jumped over 3 percent on Monday to their highest level in seven weeks after the central bank took fresh steps to inject liquidity into the struggling economy and said the stock market's correction "is almost over".
Investors were also in a buying mood ahead of the 13th five-year economic plan to be announced later this month, expecting stimulus and other growth measures.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 3.2 percent to 3,447.69 points, while the Shanghai Composite Index gained 3.3 percent to 3,287.81.
Both hit their highest levels since Aug. 24, though are still down more than 30 percent from their highs in mid-June, the start of a market rout that rocked global markets.
But in a sign that some investors may be returning to the market, trading volumes in Shanghai jumped over 60 percent from the previous session, and nearly tripled the low hit on Sept. 30.
The People's Bank of China's said at the weekend that it would expand a pilot scheme that allows banks to borrow money from the central bank using high quality credit assets as collateral.
"The policy may not immediately inject a lot of liquidity into the economy, but it has boosted expectations of monetary easing," said Wu Kan, head of equity trading at Shanghai-based investment firm Shanshan Finance.
His view was echoed by China International Capital Corp (CICC), which said in a report on Monday that it's "inevitable" for the central bank to expand the supply of base money as foreign reserves shrink, although it noted that banks currently have little incentive to obtain fresh liquidity in a slowing economy.
Investors were also emboldened by market-soothing comments from deputy central bank governor Yi Gang, who was quoted by official media as saying that China's stock market correction is "almost over." Continuación...