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Most Asian markets fell Monday as China's decision to cut interest rates again failed to reassure investors, who are growing increasingly worried about the outlook for the world's number two economy.
Sentiment has been hammered this month by a string of weak data out of Beijing indicating the post-Covid recovery has run off track.
Speculation that the Federal Reserve could tighten monetary policy further and keep rates elevated for some time has added to the gloom as it tries to bring inflation down to its two percent target.
Wall Street provided a tepid lead, while focus turns to a symposium of top central bankers and business leaders at Jackson Hole, Wyoming, later in the week, 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.
While the Fed and others contemplate more increases, the People's Bank of China on Monday announced another cut in bid to kickstart the sputtering economy.
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The decision to lower the one-year loan prime rate, 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 and the reductions were smaller than forecasters had predicted.
The announcement 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.
In early trade, Hong Kong led losses, 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, though Tokyo, Seoul and Jakarta rose.
The Jackson Hole gathering is now firmly in traders' sights with Fed chief Jerome Powell due to speak, along with European Central Bank boss Christine Lagarde.
The meet comes as markets price in expectations that borrowing costs will be kept high for some time with officials aiming to tame inflation and keep it down.
"We could see ourselves in this 5+ percent benchmark risk-free rate environment for the foreseeable period of time -- perhaps into mid-2024 or beyond," said Jerome Schneider at Pacific Investment Management Co.
Key figures around 0230 GMT
Tokyo - Nikkei 225: UP 1.0 percent at 31,748.88 (break)
Hong Kong - Hang Seng Index: DOWN 0.6 percent at 17,841.45
Shanghai - Composite: DOWN 0.1 percent at 3,129.30
Euro/dollar: UP at $1.0882 from $1.0874 on Friday
Pound/dollar: UP at $1.2740 from $1.2736
Euro/pound: UP at 85.41 pence from 85.37 pence
Dollar/yen: UP at 145.50 from 145.32 yen
West Texas Intermediate: UP 0.9 percent at $81.42 per barrel
Brent North Sea crude: UP 0.9 percent at $85.57 per barrel
New York - Dow: UP 0.1 percent at 34,500.66 (close)
London - FTSE 100: DOWN 0.7 percent at 7,262.43 (close)