Asian Shares Muted; Chinese And Hong Kong Markets Extend Rally On Stimulus Cheer

(RTTNews) - Asian stocks were muted on Wednesday, even as Chinese and Hong Kong markets posted strong gains to extend the previous session's rally after China's central bank slashed its medium-term lending facility from 2.3 percent to 2.0 percent, marking the largest reduction of interest rates for one-year loans to financial institutions in history.

The dollar hit a new one-month low versus the euro and a 2 1/2-year trough to sterling as weak U.S. data bolstered the case for deeper rate cuts.

Gold held near record levels amid increased bets for another super-sized interest rate cut at the Federal Reserve's November meeting.

Crude oil retreated from a multi-week high despite industry data pointing to larger-than-expected crude draw.

China's Shanghai Composite index surged 1.16 percent to 2,896.31, extending its stimulus-fueled rally to a second day running. Hong Kong's Hang Seng index rose 0.68 percent to 19,129.10.

China's yuan hit a fresh 16-month high, briefly crossing the key 7-per-dollar level in offshore trading, following interest-rate cuts and new measures from the country's central bank.

Japanese markets fell slightly in choppy trade as the yen held steady after slipping to a near three-week low against the dollar on Tuesday amid signs the Bank of Japan is nor hurrying to raise interest rates further.

The Nikkei average slid 0.19 percent to 37,870.26 while the broader Topix index settled 0.23 percent lower at 2,650.50.

Data showed earlier in the day that a leading indicator of Japan's service-sector inflation held steady at 2.7 percent in August.

Seoul stocks fell sharply to snap a six-day winning streak. The Kospi average dropped 1.34 percent to 2,596.32 ahead of the launch of a new stock index next week.

Investors also reacted to central bank data showing that consumer morale in the country decreased to its lowest level since May in September due to a delay in the recovery of domestic demand.

Australian markets ended slightly lower after data showed consumer price inflation slowed to a three-year low in August, but core inflation remained sticky and above the RBA's target range.

The benchmark S&P/ASX 200 dipped 0.19 percent to 8,126.40, dragged down by banks. The broader All Ordinaries index ended down 0.15 percent at 8,372.80.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 index fell 0.65 percent to 12,224.53.

U.S. stocks closed higher on Tuesday after a somewhat choppy ride as a measure of consumer confidence unexpectedly fell the most in three years.

House-price growth slowed in July but still reached another all-time high, while factory activity slumped more sharply in the mid-Atlantic region this month, separate set of data revealed.

The Dow edged up 0.2 percent, the S&P 500 added 0.3 percent and the the-heavy Nasdaq Composite advanced 0.6 percent.