Asia stocks bounce from one-year low, China gains on monetary easing

Singapore

Asian shares staged a recovery on Tuesday onreceding worries about the impact of the Omicron variant while Chinese marketswere supported by the central bank easing monetary policy.

MSCI's broadest index of Asia-Pacific shares outsideJapan (.MIAPJ0000PUS) advanced 1.3% and was on course for its biggestjump in two months, after declining on Monday to the lowest level in one year.

Euro Stoxx 50 futures rose 0.5% and FTSE futures put on0.08% in early trade, indicating a firm market open after European stocks endedhigher on Monday.

China's CSI300 index (.CSI300) gained 0.6% andHong Kong's Hang Seng Index (.HSI) advanced 1.7% as the central bankfreed up $188 billion in liquidity through a policy easing. 

"With this cut, policymakers are demonstrating a moreforceful approach to prevent an all-out property market rout," David Chao,global market strategist, Asia Pacific, ex-Japan, at Invesco said in a note.

The People's Bank of China said on Monday it would cut the amountof cash that banks must hold in reserve, its second such move this year,releasing the funds in long-term liquidity to bolster slowing economic growth.

China is in a mid-cycle slowdown and the RRR cut is exactlywhat the economy needs to get back on track, said Chao. "It's feasiblethat more RRR cuts are in store over the next year in order to stabilizegrowth," he added.

Elsewhere, Australia's S&P/ASX200 (.AXJO) rose0.95%, while Japan's Nikkei (.N225) advanced 2.1% as risk-onsentiment pushed markets higher.

MSCI's main Asia ex-Japan benchmark has lost about 5% so farthis year, with Hong Kong markets figuring among the big losers, whileIndian (.BSESN) and Taiwanese stocks (.TWII) outperformed.

Shares in embattled developer Evergrande (3333.HK) edgedup 1.7% after hitting a record low on Monday as markets awaited to see if thereal estate giant has paid $82.5 million with a 30-day grace period coming toan end.

Elsewhere, markets were supported by gains on Wall Street,where economically sensitive stocks outperformed.

"While epidemiologists have rightly warned againstpremature conclusions on Omicron, markets arguably surmised that last week'sbrutal sell-off ought to have been milder," Vishnu Varathan, head ofeconomics and strategy at Mizuho Bank, said in a note.

"After all, early assessments of Omicron cases havebeen declared mild, spurring half-full relief."

Omicron has spread to about a third of U.S. states, but theDelta version accounts for the majority of COVID-19 infections in the UnitedStates, health officials said on Sunday. 

Dr. Anthony Fauci, the top U.S. infectious disease official,told CNN it does not look like Omicron has a "great degree ofseverity."

Stocks on Wall Street closed higher on Monday.

The risk-on mood also helped the dollar climb against safehaven currencies such as the Japanese yen, , which lost 0.6% overnight, whilethe risk-friendly Australian dollar also found buyers.

Also supporting the dollar was the expectation the FederalReserve will accelerate the tapering of its bond-buying program when it meetsnext week in response to a tightening labour market.

Oil prices ticked higher, consolidating a nearly 5% reboundthe day before as concerns about the impact of the Omicron variant on globalfuel demand eased.

Brent crude futures strengthened 0.9% to $73.7 a barrel,after settling 4.6% higher on Monday.

Gold prices were steady at $1,778.5 per ounce onexpectations U.S. consumer price data due later this week will show inflationquickening.