SHANGHAI (REUTERS) - Asian shares jumped in early trade on Friday (May 20) after China cut a key lending benchmark to support a slowing economy, but a gauge of global equities remained set for its longest weekly losing streak on record amid investor worries about sluggish growth.

China cut its five-year loan prime rate (LPR) by 15 basis points on Friday morning, a sharper cut than had been expected, as the authorities seek to cushion an economic slowdown, though it left the one-year LPR unchanged. The five-year rate influences the pricing of mortgages.

Most respondents to a Reuters poll had expected a marginal 5 basis point cut to both rates.

Chinese blue-chips were 1.1 per cent higher in early trade and Hong Kong's Hang Seng index jumped more than 2 per cent. Japan's Nikkei index gained 1 per cent while while Australian shares rose 1.3 per cent.

Singapore's Straits Times Index was up 1.2 per cent at 10.53am local time.

"While it certainly will not suffice to reverse growth headwinds in Q2, (the cut) constitutes a move in the right direction, so markets might be reacting to expectations of stronger easing going forward," said Mr Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong.

Despite the gains in Asian shares, MSCI's All-Country World Price Index remained headed for its seventh straight week in the red, the longest such stretch since its inception in 2001. It would also be the longest including back-tested data extending to January 1988.

Concerns over the impact of battered supply chains on inflation and growth have prompted investors to dump shares, with Cisco Systems on Thursday tumbling to an 18-month low after it warned of persistent component shortages, citing the impact of China's Covid-19 lockdowns.

On Friday, China's financial hub of Shanghai announced three new Covid-19 cases outside of quarantined areas, throwing a wrench in the city's hopes for an exit from its strict weeks-long lockdown.

"The focus of (Chinese) officials has been to come up with easing policies to mitigate the impact of Covid-19 suppression... The problem is that such easing policies will not have any real impact so long as the Covid-19 suppression policy is tightly enforced," said Mr Christopher Wood, global head of equities at Jefferies.

The gains in Asia came after a late rally on Wall Street petered out, leaving the Dow Jones Industrial Average down 0.75 per cent, the S&P 500 0.58 per cent lower and the Nasdaq Composite off by 0.26 per cent.

Mirroring the shift in risk appetite in equities, US government bond yields ticked higher following China's LPR cut.

The US 10-year yield was last at 2.8677 per cent, up from a close of 2.855 per cent on Thursday, while the two-year yield climbed to 2.6364 per cent compared with a US close of 2.611 per cent.

In currency markets, the dollar index was 0.08 per cent higher at 102.99 as the safe-haven yen slipped against the dollar. The greenback was last up 0.23 per cent against the Japanese currency, and the euro was 0.14 per cent lower at US$1.0571.

China's onshore renminbi weakened a quarter of a per cent to 6.726 per dollar, and the more freely traded offshore renminbi weakened past 6.74 per dollar.

Oil prices remained lower on worries over economic growth, though crude pared losses following China's LPR announcement. Brent crude was last down 0.37 per cent at US$111.63 per barrel and US West Texas Intermediate crude was 0.19 per cent lower at US$112 per barrel.

Spot gold was lower, falling 0.2 per cent to US$1,838 per ounce.