Chinese shares rally on RRR cut

BEIJING - Chinese stocks rallied and regained the 2,700-point mark on Tuesday, after the central bank announced a new cut to the reserve requirement ratio (RRR).

The benchmark Shanghai Composite Index surged 1.68 percent to close at 2,733.17 points while the smaller Shenzhen index gained 2.47 percent to end the day at 9,322 points.

The ChiNext Index, the NASDAQ-style board of growth enterprises, closed 2.91 percent higher at 1,934.92 points.

The ChiNext Index reversed its downturn on Tuesday with a sudden surge during the afternoon session, ranking as the top gainer among all indexes.

Total turnover on the two bourses slightly increased, to 462.57 billion yuan ($70.75 billion).

Over 60 stocks surged by the daily limit of 10 percent, and 292 stocks gained more than 5 percent on Tuesday.

Financial heavyweights led the charge, lifting the broader indices up from negative terrain during the afternoon session.

CITIC Securities, China's largest brokerage, swelled by a whopping 7.35 percent to close the day at 15.33 yuan.

The real estate sector also performed strongly, fueled by China's soaring home prices.

The Poly Real Estate, the nation's second-largest property developer, surged by 4.41 percent and closed at 9.48 yuan.

The shares opened slightly higher on Tuesday morning, in the wake of Monday's nose-dive, and wobbled for the whole morning session. The afternoon session started with a sudden and remarkable surge which led the indices out of the doldrums and to higher levels near closing.

Market sentiment was soothed after the People's Bank of China announced on Monday night that it would cut its RRR for commercial banks by 0.5 percentage points from Tuesday.

Facing an economic slowdown, China has cut interest rates or the RRR five times in the last year.