San Francisco Frontiers - Stocks bounce despite China rate cut failing to ease worries

In afternoon trading, Paris stocks climbed 0.7 percent, Frankfurt rose 0.4 percent and London added less than one tenth of a percent.

On Wall Street, the Dow edged higher at the opening bell, with the S&P 500 rising 0.3 percent and the tech-heavy Nasdaq climbing 0.5 percent.

"The upside buying has been driven by an inclination to buy on the weakness" after three straight weeks of losses on Wall Street, said market analyst Patrick O'Hare at Briefing.com.

"It doesn't seem to be any more than that considering that market rates are moving higher, the People's Bank of China disappointed with a smaller-than-expected cut to its one-year loan prime rate and no change to its five-year loan prime rate, and Tropical Storm Hilary has inundated Southern California with a load of disruptive rainfall," he added.

Market sentiment has taken a hammering this month from a string of weak data out of Beijing indicating the post-Covid recovery has run off track, while there are concerns that the US Federal Reserve could raise interest rates further and keep them elevated for longer as it tries to bring inflation down to its two-percent target.

The focus turns this week to a symposium of top central bankers and business leaders at Jackson Hole, Wyoming, with dealers hoping for some guidance on rates.

"From recent commentaries, it appears that central bankers will keep the flexibility to hike rates further, while clearly avoiding committing to cut rates soon," said Redmond Wong at Saxo.

But Swissquote Bank analyst Ipek Ozkardeskaya said fears of a hawkish Fed have already been largely priced in by the market.

"If there is no more hawkish surprise from this week’s Jackson Hole meeting, tensions among investors could ease by next week and give markets some breathing room," she added.

Wall Street stocks took a pounding last week as data showing the US economy to be resilient -- which increases pressure on the Fed to raise interest rates further -- while borrowing costs for companies are already rising and yields on risk-free US government bonds rose to 4.3 percent.

While the Fed and others contemplate more increases, the People's Bank of China announced another cut on Monday in a bid to kickstart the sputtering economy.

The decision to lower the one-year loan prime rate (LPR), which serves as a benchmark for corporate loans, comes after a reduction in June and leaves it at a historic low.

However, it stood pat on the five-year LPR, which is used to price mortgages, thus providing no help to troubled property developers.

The moves were less than analyst had expected and did little to soothe worried investors, who are calling for leaders to unveil more concrete measures to boost growth.

A series of pledges to reinvigorate the economy have been made but with very little detail.

Hong Kong led losers across Asia, extending a sell-off to a seventh straight day and leaving it more than 20-percent down from its January high.

Shanghai was also in the red along with Sydney, Singapore and Wellington, although Tokyo, Seoul, Mumbai, Bangkok and Jakarta rose.

"Unsurprisingly markets were less than impressed by this move, expecting authorities to be much more forceful. This lack of urgency... is unlikely to spark demand in an economy where loan demand appears to be low anyway," said Michael Hewson of CMC Markets.

- Key figures around 1330 GMT -

New York - Dow: UP FLAT at 34,509.35 points

London - FTSE 100: UP less than 0.1 percent at 7,267.88

Frankfurt - DAX: UP 0.4 percent at 15,630.46

Paris - CAC 40: UP 0.7 percent at 7,213.40

EURO STOXX 50: UP 0.5 percent at 4,235.74

Tokyo - Nikkei 225: UP 0.4 percent at 31,565.64 (close)

Hong Kong - Hang Seng Index: DOWN 1.8 percent at 17,623.29 (close)

Shanghai - Composite: DOWN 1.2 percent at 3,092.98 (close)

Euro/dollar: UP at $1.0895 from $1.0874 on Friday

Pound/dollar: UP at $1.2750 from $1.2736

Euro/pound: UP at 85.43 pence from 85.37 pence

Dollar/yen: UP at 146.12 from 145.32 yen

West Texas Intermediate: UP 0.8 percent at $81.87 per barrel

Brent North Sea crude: UP 0.7 percent at $85.37 per barrel

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G.Allen--SFF