Chinese stocks climb; dollar steady before US inflation test

By Ankur Banerjee

SINGAPORE (Reuters) - Asian stocks got a lift on Thursday from Chinese stocks as China's central bank kicked off its 500 billion yuan facility to spur capital markets, while the dollar lingered near a two-month high ahead of U.S. inflation data later in the day.

The People's Bank of China (PBOC) said it would start accepting applications from financial institutions to join a newly created funding scheme, a plan it announced on Sept. 24 as part of a series of stimulus measures that drove Chinese stocks higher.

China's blue-chip CSI300 index rose 1.7% in early trading, a day after dropping 7% as investors remained focused on the details of the stimulus measures from Chinese authorities to help revive the stuttering economy.

Hong Kong's Hang Seng rose 2.5%, after slipping 1.3% on Wednesday and is up 24% this year.

That left MSCI's broadest index of Asia-Pacific shares outside Japan 0.76% higher in early Asian hours. Japan's Nikkei rose 0.5%.

The market's attention is now on a finance ministry press conference on Saturday which will provide details of the fiscal stimulus plan.

"It’s likely that if and when we get more details on the scale of spending, other policymakers will be better able to start to roll out supportive policies relevant to their functions," said ING economists in a note on Thursday.

"While it may take more time compared to monetary policy, we continue to expect a fiscal stimulus push in the coming weeks and months."

China shares rallied to two-year highs on Tuesday after the long National Day holiday but quickly lost steam as the lack of details on China's stimulus measures dealt a blow to market enthusiasm.

Benchmark indexes in China notched their biggest daily losses on Wednesday since the COVID-19 pandemic began.

"The ultimate goal for the Chinese market isn’t to create sudden rallies. It’s all about wanting to inject confidence in the economy domestically, to relieve pressure on the real estate market. Their end objective is domestic stability," said Henry Wu, head of XTrackers Products US.

U.S. CPI LOOMS

Overnight, the S&P 500 and the Dow closed at record highs after the release of Federal Reserve meeting minutes and ahead of September inflation data. [.N]

The minutes showed a "substantial majority" of Fed officials at the September meeting supported beginning an era of easier monetary policy with an outsized half-point rate cut.

However, there appeared even broader agreement that the initial move would not commit the Fed to any particular pace of rate reductions in the future, the minutes showed.