Asia equities rally after China rate cut Monday 03:15GMT. Asian equities rallied after the People's Bank of China surprised markets with its first benchmark rate cut in two years on Friday. The Hang Seng China Enterprises Index of China-based companies listed in Hong Kong jumped 3.2 per cent in early trading. The broader Hang Seng Index in Hong Kong climbed 2 per cent, while the Shanghai Composite rose 1.4 per cent. Sydney's S&P/ASX 200 and South Korea's Kospi Composite each climbed 1.2 per cent, while the Jakarta Composite rose 0.8 per cent. Markets in Japan were closed for a holiday. On Friday, China's central bank cut its benchmark lending rate 0.4 percentage points to 5.6 per cent and its deposit rate 0.25 percentage points to 2.75 per cent. The PBoC's move was seen by analysts as an attempt to counter a slowdown after easing measures earlier this year failed to lower borrowing costs for credit-starved companies, particularly for smaller enterprises. The PBoC also said it would allow banks to set their own deposit rates up to 20 per cent above the benchmark, compared with a previous ceiling of 10 per cent. By raising the upper limit, the PBoC is allowing Chinese banks to better compete for funding, analysts said. Strategists at Crédit Agricole called the moves "a sign of economic weakness" and "an admission that targeted easing was not enough." "We expect the cut to be the opening salvo in a series of easing moves," they wrote on Monday. Analysts at Barclays have forecast two more interest rate cuts in the first six months of next year. Commodities and the mainland property stocks were among those boosted by Friday's news. In Australia, mining stocks jumped 3.8 per cent, with iron ore producers rallying most: Fortescue Metals Group rose as much as 12 per cent and BC Iron shares climbed 7 per cent. China Overseas Land and Investment, a Hong Kong-listed property developer, rose nearly 12 per cent, while shares in China Vanke, the country's largest largest residential property developer, rose 11 per cent. Unlike previous moves, the PBoC's cuts to the benchmark deposit and lending rates were uneven - lending rates were trimmed more than deposit rates - a decision that will squeeze banks" margins, analysts said. "We estimate the central bank's actions will contract the China banks" [net interest margins] for 2015 by 13-19 basis points and lower net profits by 9-12 per cent on average under different scenarios," analysts at Barclays wrote on Monday." They added: "Although the Hong Kong and China markets may rally on the news, we expect bank stocks to underperform in the next few months although those of the larger banks, the Big Four [Bank of China, China Construction Bank, Industrial and Commercial Bank of China and Agricultural Bank of China] should fare relatively better."