Hong Kong and Shanghai stocks opened substantially higher Thursday after the People's Bank of China (PBOC) lowered the reserve requirement ratio (RRR) for the nation's banks by half a percentage point to stimulate lending and the broader economy. The Hang Seng Index and the Shanghai Composite Index advanced 1% and 1.5%, respectively, in early moves. The PBOC's measure marked its first industry-wide reserve-ratio cut in more than two years, though some targeted cuts have occurred since then. The central bank action also included some addition RRR cuts for certain lenders. Mainland Chinese banks rallied across the board, as China Merchants Bank Co. leapt 4.6%, Bank of China Ltd. jumped 3.5%, both Bank of Communications Co. and Agriultural Bank of China Ltd. gained 3.2% each, China Minsheng Banking Corp. was 3.1% higher, and Industrial & Commercial Bank of China Ltd. climbed 2.5%. Some of the smaller mainland lenders also saw strong gains, as Chongqing Rural Commercial Bank Co. improved by 4.1%, and Bank of Chongqing Co. added 1.9%. The mainland property sector also saw a broad advance as hopes for increased lending rose, with China Resources Land Ltd. surging 5.2%, and China Overseas Land & Investment Ltd. stronger by 3.6%. The news also helped other financial stocks, with major movers including broker Citic Securities Co. (up 3.8%), rival China Everbright Ltd. (up 3%), and China Life Insurance Co. (up 2.1%). However, European-based banks HSBC Holdings PLC Standard Chartered PLC fell 0.9% and 0.4%, respectively, after the European Central Bank said it would no longer accept Greek sovereign bonds as collateral.
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