SHANGHAI: China stocks rallied for a third straight session on Thursday, after the country’s central bank announced supportive policies including a deep cut to bank reserves to spur a fragile economy and prop up tumbling shares.

The People’s Bank of China (PBOC) on Wednesday announced a 50-basis points (bps) cut in the amount of cash banks must hold as reserves from Feb. 5.

It was the biggest such cut in two years and will inject about $140 billion of cash into the banking system. China’s Shanghai Composite Index jumped 3%, marking the biggest daily gain since March 2022. The blue-chip CSI300 Index and the Hang Seng benchmark both closed up 2%. China’s yuan held steady against the US dollar.

The three sessions of rebound came after the blue chip index hit a five-year low last week as the world’s second-largest economy struggles with a fragile post-pandemic recovery, heavy local government debts and a weak property sector. The index has rebounded more than 5% from the recent trough.

The PBOC on Wednesday also said it is widening the uses for commercial property lending by banks in its latest effort to ease a liquidity crunch facing troubled real estate firms.

“The latest PBOC announcements may be interpreted as the beginning of a policy pivot from previous reactive and piecemeal measures by investors, and they will continue to look for further signs and acts of policy support,” said Tao Wang, chief China economist at UBS Investment Bank. Shares in real estate developers, construction engineering and communications jumped roughly 6% each to lead the gains. Foreign investors bought a net 6.3 billion yuan ($879.18 million) of Chinese shares via the Stock Connect on the day, the biggest daily inflow since Dec 28.

State-owned enterprise stocks also shone, after an official of the State-owned Assets Supervision and Administration Commission of the State Council said China will include the effectiveness of market value management within the assessment of leaders of central state-owned enterprises.