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China's central bank cut interest rates and simultaneously relaxed reserve requirements for the second time in two months on Tuesday, cranking up support for a stuttering economy and a plunging stock market that has sent shockwaves around the globe.
The People's Bank of China (PBOC) said on its website that it was lowering the one-year benchmark bank lending rate by 25 basis points to 4.6 percent, effective from Aug. 26.
The central bank also reduced one-year benchmark deposit rates by 25 basis points, it said.
At the same time, the PBOC said it was also lowering the reserve requirement ratio by 50 basis points to 18.0 percent for most big banks. The change will be effective on Sept. 6.
The move comes after Chinese stock indexes nosedived more than 7 percent, hitting their lowest levels since December, following their more than 8 percent plunge on Monday.
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The central bank shocked global markets by devaluing the yuan by nearly 2 percent on Aug. 11. The PBOC called it a free-market reform but some saw it as the start of a long-term yuan depreciation to spur exports.
European shares, oil and the dollar extended gains in midsession trade on Tuesday as a market rebound gathered pace after China cut interest rates and bank reserve requirements to stimulate its wavering economy.
The pan-European FTSEurofirst 300 index rose 4.2 percent, recouping the bulk of the 5 percent-plus it lost the previous day.
The dollar index jumped to a gain of 0.70 percent against its currency basket.
U.S. crude futures traded at $39.60 per barrel, up 3.6 percent on the day, while Brent rose 3.7 percent to $44.28.
