By Andrew Galbraith

SHANGHAI, (Reuters) – Asian shares rose in the early trading session on Friday as China reduced a crucial lending benchmark. However, a gauge measuring global equities remained at its longest losing streak of weekly records amid concerns about slowing growth and investor fears.

China reduced its five-year loan rate by 15 basis points (LPR), on Friday morning. This was a more drastic cut than expected as authorities try to offset an economic slowdown. However, it kept the one year LPR constant. Pricing of mortgages is affected by the five-year rate.

A Reuters survey revealed that most respondents expected a slight 5-basis point cut in both rates.

MSCI’s largest index of Asia-Pacific shares, outside Japan, quickly grew on the gains made after the cuts and was at its highest level since 1.4%.

Chinese bluechips were 1.1% more in the early trade. Hong Kong’s was up over 2% while Australian shares rose 1.3% Tokyo’s stock index gained 1 percent.

“While the cut will not reverse Q2’s growth headwinds, it is a significant step in the right directions so markets may be responding to expectation of stronger easing moving forward,” stated Carlos Casanova from Union Bancaire Privee Hong Kong.

MSCI’s All-Country World Price Index (MSCI) was headed for its 7th consecutive week of red, the longest streak in such a stretch since it’s inception in 2001. This would be also the longest if you include back-tested data that dates to January 1988.

Investors are worried about the effects of troubled supply chains on growth and inflation. Cisco Systems Inc (NASDAQ) fell to an 18-month lowest on Thursday after warning of component shortages. This was attributed to China’s COVID lockdowns.

China’s financial center of Shanghai, China, announced Friday three COVID-19 new cases that were not in quarantined zones. This is a setback for the city’s efforts to get out of its weeks-long, strict lockdown.

“The goal of Chinese officials is to develop easing strategies to reduce the effects of COVID suppression.” “The problem with such easing policies is that they will have no real effect so long as COVID suppression policy remains strictly enforced,” Christopher Wood, Jefferies global head of equity.

After a Wall Street rally that ended late, Asia saw gains of 0.75% and 0.58% respectively, while the on fell by 0.26 percent.

U.S. bond yields rose in line with the change in risk appetite for equities following China’s LPR reduction.

Last Thursday’s close to 2.855% saw the U.S. 10 year yield rise to 2.8677%. The two-year yield rose to 2.6364%, compared with 2.611%.

As the safe-haven currency yen lost its value against the US dollar, the currency market saw the exchange rate rise to 102.99. At $1.0571, the greenback was 0.23 percent higher than the Japanese currency. The euro was 0.144% lower.

China has seen its currency fall by 25% to 6.726 dollars per dollar. The more freely traded currencies have fallen past 6.74 dollar.

Oil prices were lower due to concerns about economic growth. Crude pared its losses after China’s LPR news. Last week, oil prices were down 0.3% at $111.63/barrel. U.S. West Texas Intermediate crude crude was 0.9% lower at $112/barrel.

It was 0.2% lower at $1838/ounce. [GOL/]