Asia: Shanghai closes lower before Beijing cuts bank reserves ratio

Most Asian stocks were higher on Wednesday except in China following disappointing services data.

After markets closed, however, China's central bank announced it will cut its bank reserves by 50 points to 19.5% to "keep [the] economy stable".

The People's Bank of China said the move will be effective on Thursday and aims to help the second-biggest economy to lift economic growth amid a slowdown.

Having started positively, the Shanghai composite index ended down 0.96% on Wednesday, after earlier services PMI data was shown to have grown at the slowest pace in six month at 51.8 in January, a decline from a 53.4 reading the month before.

"The Chinese services sector continued to expand in January, albeit at a slower pace while both input and output price inflation eased," said Qu Hongbin, chief economist at HSBC.

"Given continued contraction of the manufacturing sector, we believe more easing measures are warranted to support growth in the coming months."

In a more positive note, Nikkei 225 was up 1.98% after Bank of Japan Governor Kuroda said in parliament the bank will do its utmost to hit its 2% inflation target.

Japanese services purchasing managers index (PMI) came slightly down in January at 51.3 from 51.7 in December, but Markit said it signals a "moderate increase in activity at Japanese services providers".

Markit economist Amy Brownbill said: “Service sector activity growth remained positive at the start of 2015, with business activity rising at a sustained rate supported by a return to new business growth.

“Meanwhile, the effects of the weaker currency were still being felt, with input prices rising. However, the rate of inflation slowed to the weakest in just under a year-and-a-half”.

Hong Kong's Hang Seng rose 0.51%, helped by the higher oil price, which gained following speculation of supply cuts due to an ongoing US refinery strike and continuing reductions to spending plans by major producers such as BP.