© Reuters. FILE PHOTO – An investor stands in front of an electronic board showing stock information at a brokerage house in Shanghai, China, August 24, 2015. REUTERS/Aly Song

By Andrew Galbraith

SHANGHAI (Reuters) – Asian shares jumped in early trade on Friday after China cut a key lending benchmark to support a slowing economy, but a gauge of global equities remained set for its longest weekly losing streak on record amid investor worries about sluggish growth.

China cut its five-year loan prime rate (LPR) by 15 basis points on Friday morning, a sharper cut than had been expected, as authorities seek to cushion an economic slowdown, though it left the one-year LPR unchanged. The five-year rate influences the pricing of mortgages.

Most respondents to a Reuters poll had expected a marginal 5-basis-point cut to both rates.

MSCI’s broadest index of Asia-Pacific shares outside Japan quickly built on early gains after the cut, and was last up 1.4%.

Chinese blue-chips were 1.1% higher in early trade and Hong Kong’s jumped more than 2%, while Australian shares rose 1.3%. In Tokyo, the stock index gained 1%.

“While it certainly will not suffice to reverse growth headwinds in Q2, (the cut) constitutes a move in the right direction so markets might be reacting to expectations of stronger easing going forward,” said Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong.

Despite the gains in Asian shares, MSCI’s All-Country World Price Index remained headed for its seventh straight week in the red, the longest such stretch since its inception in 2001. It would also be the longest including back-tested data extending to January 1988.

Concerns over the impact of battered supply chains on inflation and growth have prompted investors to dump shares, with Cisco Systems Inc (NASDAQ:) on Thursday tumbling to an 18-month low after it warned of persistent component shortages, citing the impact of China’s COVID lockdowns.

On Friday, China’s financial hub of Shanghai announced three new COVID-19 cases outside of quarantined areas, throwing a wrench in the city’s hopes for an exit from its strict, weeks-long lockdown.

“The focus of (Chinese) officials has been to come up with easing policies to mitigate the impact of COVID suppression … The problem is that such easing policies will not have any real impact so long as the COVID suppression policy is tightly enforced,” said Christopher Wood, global head of equities at Jefferies.

The gains in Asia came after a late rally on Wall Street petered out, leaving the down 0.75%, the 0.58% lower and the off by 0.26%.

Mirroring the shift in risk appetite in equities, U.S. government bond yields ticked higher following China’s LPR cut.

The U.S. 10-year yield was last at 2.8677%, up from a close of 2.855% on Thursday, while the two-year yield climbed to 2.6364% compared with a U.S. close of 2.611%.

In currency markets, the was 0.08% higher at 102.99 as the safe-haven yen slipped against the dollar. The greenback was last up 0.23% against the Japanese currency, and the euro was 0.14% lower at $1.0571.

China’s weakened a quarter of a percent to 6.726 per dollar, and the more freely traded weakened past 6.74 per dollar.

Oil prices remained lower on worries over economic growth, through crude pared losses following China’s LPR announcement. was last down 0.37% at to $111.63 per barrel and U.S. West Texas Intermediate crude was 0.19% lower at $112 per barrel.

was lower, falling 0.2% to $1838 per ounce. [GOL/]

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