Hong Kong, Shanghai soar on China stimulus as strong yen hits Tokyo

HONG KONG, China — Shares in Hong Kong and mainland China rocketed Monday, extending last week's surge after Chinese authorities unveiled a raft of measures aimed at kickstarting the world's number two economy.

However, Tokyo plunged as much as five percent in reaction to Shigeru Ishiba's election last week as the head of Japan's ruling party, which boosted expectations the Bank of Japan will continue hiking interest rates.

Shanghai jumped more than eight percent -- its best day since 2008 -- and Shenzhen more than 10 percent, while Hong Kong briefly leapt around four percent.

Investors have been rushing back into the beaten-down markets in reaction to a series of economy-boosting stimulus out of Beijing over the past week.

Among the measures unveiled were interest rate cuts, easing how much banks must keep in reserve and softer rules on buying homes.

And on Monday, three megacities -- Shanghai, Guangzhou and Shenzhen -- eased restrictions on buying homes, while six of China's biggest banks said they would tweak interest rates on mortgages for existing home loans following a request to lower them from the central bank.

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

Tech firms were also enjoying a healthy run-up, with ecommerce giant JD.com soaring more than 11 percent and rival Alibaba up almost eight percent.

The rally -- which has seen Shanghai rise more than 20 percent in the past six trading days -- comes a day before Chinese markets are closed for the Golden Week holiday.

Harry Murphy Cruise, an economist at Moody's Analytics, said the moves "signal growing unease about the health of China's economy".

"That officials brought forward economic discussions to this week's Politburo meeting -- rather than sticking to the December schedule -- highlights the urgency of the problem."

The need for stimulus support was highlighted Monday by data showing China's factory activity shrank in September for the fifth successive month.

Still, Kathleen Brooks, research director at broker XTB, said: "The market is not focused on this data, as it is