China stocks up 1.6 pct after interest rate cut

SHANGHAI, Oct 30 - China's main stock index rose 1.62 percent on Thursday after China cut interest rates for the third time in six weeks.

The benchmark Shanghai Composite Index <.SSEC> was at 1,747.634 points at 0213 GMT after opening up 0.75 percent and briefly dipping into negative territory. It ended down nearly 3 percent on Wednesday at its lowest close in 25 months.

After the market closed on Wednesday, the Chinese central bank announced a 0.27 percentage point cut in both the benchmark rate for one-year loans by commercial banks, to 6.66 percent, and in the rate on one-year certificates of deposit, to 3.60 percent, starting from Thursday.

The cut was widely expected, as the Chinese central bank's part of a worldwide effort to aid the faltering global economy, but analysts doubted it would significantly ease the stock market's key concerns, especially over slumping earnings growth at listed Chinese companies.

They said the market appeared to be drawing strength, however, from a surge in shares in Hong Kong, where the benchmark Hang Seng Index <.HSI> rose more than 5 percent.

Bank and property shares were higher, with Industrial and Commercial Bank of China <601398.SS>, the country's biggest bank, rising 0.28 percent to 3.59 yuan, after losing nearly 6 percent on Wednesday.

China Vanke Co <000002.SZ>, the country's largest property developer, rose 0.34 percent to 5.92 yuan.

The biggest stock in the index, PetroChina <601857.SS>, led the gain, rising 2.43 percent to 10.52 yuan.

"Both the timing and the extent of the interest rate cut were widely expected. Investors are still cautious, as the rate cut cannot ease the current poor condition of the economy," said Chen Jinren, an analyst at Huatai Securities. ($1 =6.84 Yuan)