The two measures send a signal that the government may not be eager to see an abrupt end to a stock market rally that has seen prices more than double in the last 12 months. The rally has been underpinned by speculative trading heavily financed with borrowed money. Young, often poorly educated investors have been betting on further appreciation even as business managers, with more information on the true health of their companies, have reportedly been selling heavily.

"We think today's move is mainly driven by the government desire to support a bull market," Lan Shen and Shuang Ding, two economists at Standard Chartered, said in a statement on Saturday evening.

Keeping the stock market buoyant, through measures like the interest rate cut, could help the Chinese government sell part of its stakes in government-owned enterprises that have incurred huge debts.