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China's surprise rate cut lead Asian shares higher

China's surprise interest rate cut spurred Asian indices on Monday, mirroring a positive session on Wall Street last Friday.

In an unexpected move after the Shanghai Composite index closed for the week, the People's Bank of China cut its benchmark interest rate on Friday for the first time in over two years to support its cooling economy. The one-year benchmark lending rate was trimmed by 40 basis points to 5.6 percent, while one-year benchmark deposit rates were lowered by 25 basis points; the move is effective from November 22.

"[Taking it at] face value, the rate cut is intended to keep Chinese monetary policy neutral. With inflation falling, the real interest rate is more or less unchanged from a year ago," Bill Adams, Senior International Economist at PNC, told CNBC's "The Rundown."

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Last Friday, U.S. stocks ended the week at highs as markets rallied on central bank stimulus efforts and an encouraging domestic outlook. Also helping sentiment were comments from European Central Bank (ECB) President Mario Draghi, who reiterated dovish statements in a speech at a European banking conference in Frankfurt on Friday. Later in the day, the ECB announced that it has begun buying asset-backed securities.

Meanwhile, Japan's stock market was closed for the Labor Thanksgiving Day.

Symbol
Name
Price
 
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%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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Mainland shares up

Chinese equities advanced nearly 2 percent to touch a near three-year high in the first trading session of the week as traders cheered an interest rate cut by the country's central bank.

Among gainers, property firm Poly Real Estate and Founder Securities made gains of 10 percent each.

However mainland banks traded mixed on concerns that the rate cut could squeeze interest rate margins; Bank of China ended 0.3 percent lower while Industrial and Commercial Bank of China ceded gains to finish unchanged.

Meanwhile, Hong Kong's Hang Seng index rallied 1.9 percent to a six-week high of 23,883.

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"Investors are looking at China to deliver more because this move doesn't really turn the dial on the economy." Frederic Neumann, MD & co-head of Asian economics research at HSBC, told CNBC's "Asia Squawk Box."

"It is a concession by the Chinese after drawing a hard line [on stimulus] and this is the first break in that line. They will probably do more next year [and this] is what markets are latching on to," he added.

Sydney surges 1.1%

Australia's S&P ASX 200 index snapped a five-session losing streak on Monday as resource firms bounced back from multi-year lows on hopes that China's interest rate cut could boost demand and prices for commodities.

Fortescue Metals advanced nearly 10 percent while Mount Gibson and BC Iron closed up 6 percent each.

BHP Billiton rose 3.8 percent as the world's biggest miner stepped up its cost-cutting plans early Monday. At an investor briefing in Sydney, chief executive Andrew Mackenzie said the firm expects to reap savings of at least $4 billion by June 2017 and trimmed capital spending forecast by 4 percent to $14.2 billion.

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Meanwhile, the Australian dollar also got a lift from China's rate cut. The currency rose 0.2 percent to trade at $0.8685 against the U.S. dollar.

"The Chinese rate cut and the signal of determination to support growth are positive for commodity prices and the Australian share market," wrote Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital, in a note. "While a return to a secular bull market in commodities and Australian shares is unlikely, both have been oversold lately and China's move could provide the trigger for a decent rally into year-end."

Seoul jumps 0.7%

South Korean stocks tracked Asia-wide gains to touch their highest levels since 10 October 2014 on Monday.

Blue-chip majors were mostly higher; Hyundai Motor made gains of 4 percent while Kia Motors dropped 0.7 percent. Samsung Electronics closed down 0.3 percent after the Wall Street Journal reported that the electronics giant is considering a major management shake-up.

Read MoreGoldman is overweight China, India for next year

Nifty hits record high

Indian shares rose 0.6 percent to trade at a record high of 8,530 on Monday.