China said it would scrap mandatory quarantine on arrival, further unwinding years of strict virus controls
China said it would scrap mandatory quarantine on arrival, further unwinding years of strict virus controls AFP News

European and Asian markets advanced on Tuesday after China said it would end quarantines for overseas arrivals, spurring hopes for the revival of the world's second-largest economy.

China has abruptly reversed its strict pandemic restrictions even as a surge in infections overtakes the country.

The curbs had torpedoed the economy and sparked nationwide protests.

The latest easing will see three years of border controls end on January 8, when Beijing downgrades Covid-19 to a Class B infectious disease.

People in China have since gone rushing to search for overseas flights, with the reopening set to be a boon for the travel industry.

China's benchmark Shanghai index and the second index in Shenzhen both posted healthy gains, while Tokyo ended a shade higher with Seoul, Singapore and Mumbai also all up.

Markets in London, Hong Kong and Sydney were still closed for a holiday.

Paris was up almost one percent and Frankfurt rose 0.7 percent in early afternoon trades.

"Inbound tourism is not a huge economic bounty for China relative to domestic tourism but policy fast-track and early zero-Covid exit means growth could recover enormously," said Stephen Innes of SPI Asset Management.

Markets have also been buoyed by fresh data last week that indicated a slowing of US inflation, as well as an uptick in consumer spending, which saw Wall Street take gains into the Christmas break.

But the news was not definitive and all eyes will be on how the Federal Reserve raises interest rates to balance inflationary concerns alongside the possibility of a recession caused by increased borrowing costs.

Following a holiday for commodities traders on Monday, oil continued its surge after a senior official said Russia could cut up to seven percent of its production next year.

Production was also curtailed by freezing conditions in the United States, where more than 1.8 million barrels a day of oil processing capacity in Texas was hit by the extreme weather, according to Bloomberg News.

Both Brent Crude and West Texas Intermediate were up on the supply shortfalls and expectations of renewed demand from China.

"The Chinese reopening news could give a helping hand to oil bulls for an extension of the rally to the $88 pb (per barrel) level," said Ipek Ozkardeskaya, analyst at Swissquote bank.

Frankfurt - DAX: UP 0.7 percent at 14,040.01 points

Paris - CAC 40: UP 1.0 percent at 6,567.39

EURO STOXX 50 - UP 0.8 percent at 3,846.50

Tokyo - Nikkei 225: UP 0.2 percent at 26,447.87 (close)

Shanghai - Composite: UP 1.0 percent at 3,095.57 (close)

Dollar/yen: UP at 133.19 yen from 132.62 yen on Monday

Euro/dollar: UP at $1.0651 from $1.0631

Pound/dollar: DOWN at $1.2036 from $1.2063

Euro/pound: UP at 88.48 pence from 88.13 pence

Brent North Sea crude: UP 0.5 percent at $84.90 per barrel

West Texas Intermediate: UP 0.5 percent at $79.98 per barrel

New York - Dow: UP 0.5 percent at 33,203.93 (close Friday)

London - FTSE 100: UP 0.1 percent at 7,473.01 (close Friday)