China's central bank reduced the amount of cash that commercial banks must put aside as reserves, a move that analysts said is aimed to shore up economic growth and could be followed by more monetary measures to address any further downturn.

The People's Bank of China said in a statement that the reserve requirement ratio, known as RRR, will be cut by 50 basis points for all banks beginning on Tuesday, taking the ratio to 17 percent for the country's biggest lenders. It is aimed to help keep market liquidity at reasonable levels and guide stable and appropriate credit growth, according to the statement.

China's foreign exchange reserves hit $3.3 trillion by the end of last year, over $500 billion less than a year ago, sparking concerns over liquidity shortage that have spread to the capital market. Major stock indexes have tumbled continually since the start of this year, with the benchmark Shanghai Composite Index shedding nearly 30 percent at the worst.