Markets buzz on Chinese liquidity shot

Yesterday, Chinese GDP numbers showed that economic growth slowed in 2013 from 7.8 per cent to 7.7 per cent.

In response, the Chinese government last night administered a short-term liquidity injection to commercial banks, showing its willingness to act in the face of dwindling growth.

Market strategist Ishaq Siddiqi of ETX Capital comments that markets have "taken heart to this".

The news led to growing risk appetite, he says, with European bourses advancing, tracking Asian counterparts higher.

The easing of interbank lending rates comes ahead of the Chinese new year, with the central bank attempting to mitigate the impact of the holiday, when large amounts of cash are withdrawn.

Tokyo’s Nikkei gained 1.5 per cent in Tuesday trading, with other Asian bourses rallying on the allayed credit squeeze fears.