China stocks soar on stimulus, Europe slides on automaker woes

Shanghai's stock market closed up more than eight percent -- its best day since 2008 -- while Hong Kong briefly leapt around four percent, a day before Chinese markets shut for the Golden Week holiday.

They extended a rally begun last week as China announced fiscal measures -- notably interest-rate cuts and eased rules on buying homes -- aimed at igniting growth in the world's second-biggest economy.

Developers were among the best performers in Hong Kong, with Kaisa rocketing more than 80 percent, Sunac jumping over 55 percent and Agile Group up 19 percent.

Tech firms also enjoyed strong gains, with e-commerce giant JD.com advancing more than 11 percent and rival Alibaba up almost eight percent.

"Another day, and another rally for Chinese stocks," said Kathleen Brooks, research director at XTB.

"The Chinese stock market rally will take a breather during the October holiday, which will give investors time to take stock and to decide whether the Asian powerhouse's shares have further to run," she said.

Elsewhere in Asia, stocks plunged nearly five percent in Tokyo on a strong yen. The Japanese currency has won support after Shigeru Ishiba was elected head of Japan's governing party last week.

Analysts said his win and imminent appointment as prime minister boosted expectations that the Bank of Japan would continue hiking interest rates, keeping the yen high which in turn has weighed on Japanese exporters.

In Europe, the Paris and Frankfurt stock markets retreated as major automakers lowered profit forecasts, partly owing to weakness in China.

Shares in Paris-listed Stellantis -- whose brands include Jeep, Fiat and Peugeot -- slumped nearly 15 percent in afternoon deals, with the group citing costs for improving its North America operations and increased Chinese competition for its woes.

Britain's Aston Martin also lowered its financial guidance for 2024, causing its shares to drop around 23 percent nearing the half-way mark.

This followed German auto giants Volkswagen, Mercedes and BMW all cutting outlooks in recent weeks.

"Aston Martin is a prime example of how China's economic woes have been making well-off Chinese consumers more cautious," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

"The property crisis has affected perceptions of wealth and put people off buying big-ticket items, like high-end cars," she said.

Shares in other major carmakers also suffered, with Renault losing six percent, Porsche 4.5 percent and Volkswagen 2.3 percent.

The London stock market took a hit from official data showing the UK economy grew less than initially estimated in the second quarter.

Investor focus is also expected to remain on the outlook for US interest-rate cuts after data last week revealed cooling inflation in the world's biggest economy.

The figures boosted hopes that the Federal Reserve would announce another rate cut at its next meeting, having slashed them by 50 basis points earlier this month.

Key figures around 1145 GMT

London - FTSE 100: DOWN 0.7 percent at 8,262.93 points

Paris - CAC 40: DOWN 1.8 percent at 7,653.91

Frankfurt - DAX: DOWN 0.8 percent at 19,324.78

Tokyo - Nikkei 225: DOWN 4.8 percent at 37,919.55 (close)

Hong Kong - Hang Seng Index: UP 2.4 percent at 21,133.68 (close)

Shanghai - Composite: UP 8.1 percent at 3,336.50 (close)

New York - Dow: UP 0.3 percent at 42,313.00 (close)

Dollar/yen: UP at 142.51 yen from 142.15 yen on Friday

Euro/dollar: UP at $1.1201 from $1.1169

Pound/dollar: UP at $1.3403 from $1.3375

Euro/pound: UP at 83.56 pence from 83.47 pence

West Texas Intermediate: DOWN 0.7 percent at $67.77 per barrel

Brent North Sea Crude: DOWN 0.5 at $71.49 per barrel

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