An index of Asian shares slipped on Monday and Chinese stock markets erased earlier sharp gains made after China’s central bank boosted banks’ lending power by reducing their reserve requirements. Financial spreadbetters expected gains in Europe, though the bullish mood was likely to be tempered by the late selloff in Asia. Britain’s FTSE 100 .FTSE was seen to open 35 to 36 points higher, or up 0.5 percent; Germany’s DAX .GDAXI to open 23 to 25 points higher, or up 0.2 percent; and France’s CAC 40 .FCHI to open 12 to 15 points higher, or up 0.2 percent.
China’s central bank on Sunday cut the amount of cash that banks must hold as reserves, the second industry-wide cut in two months, adding more liquidity to bolster slowing growth. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slumped about 0.9 percent, after rising to a seven-year peak in the previous session. Japan’s Nikkei stock index .N225 ended down 0.1 percent, after dropping 1.3 percent last week.
“There’s no need for markets to worry too much because of the weakness in global stocks on Friday,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, who said China’s latest step to shore up its economy helped support Japanese shares. Chinese stock markets rallied earlier in the day, but later turned negative. The CSI300 index .CSI300 was down 1.7 percent, while the Shanghai Composite Index .SSEC shed 1.7 percent. Hong Kong’s Hang Seng .HSI was down 2.2 percent.