China stocks up nearly 2% on policy optimism

Shanghai: China stocks rose nearly 2% on Monday morning led by resources shares, as lower-than-forecast inflation data fanned optimism Beijing will continue with loose monetary policies.

The blue-chip CSI300 index rose 1.7%, to 3,241.22 points by the lunch break, while the Shanghai Composite Index gained 1.8%, to 3,039.41 points.

Hong Kong shares followed the mainland market higher. The Hang Seng index added 0.5% while the Hong Kong China Enterprises Index gained 1.3%.

Chinese market gains had been curbed by fears that accelerating inflation would limit room for monetary easing, after the consumer price index (CPI) in February rose at its fastest pace in more than a year.

But the annual March consumer price figure came out surprisingly unchanged from the previous month at 2.3%, while wholesale prices remained stubbornly in deflation, down 4.3%, although the pace of decline eased.