Central bank move lifts equities to two month high

Chinese stocks rose on Monday, sending the Shanghai Composite Index to a two-month high, after the central bank expanded the number of lenders eligible for lower reserve requirement ratios.

China Minsheng Banking Corp surged at least 1.7 percent in Hong Kong and Shanghai while Industrial Bank Co climbed 1.6 percent after confirming they had received permission from the People's Bank of China to set aside fewer funds against deposits.

The Shanghai Composite Index rose 0.7 percent to 2,085.98 points. The Hang Seng China Enterprises Index in Hong Kong added 0.1 percent to 10,522.13.

China Merchants climbed 1.6 percent in Hong Kong and 1.7 percent in Shanghai.

"The targeted easing over the past two months has kept a floor under growth and assuaged investors' concerns about a hard landing," said Michelle Gibley, director of international research at San Francisco-based Charles Schwab Corp.

"Chinese stocks are pricing in a lot of bad news and we believe the risk/reward is favorable for owning Chinese stocks over the next 6-12 months."

The Shanghai gauge climbed 2 percent last week as data showed industrial output data and retail sales grew in May, overshadowing a slump in the property industry as sales and construction dropped. The rally through Monday pared this year's loss to 1.4 percent.

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