The central bank of China, injected 265 billion yuan ($41 billion Cdn) into the country’s money markets Tuesday in a stimulus measure aimed at keeping short-term interest rates low.

It was the second biggest debt purchase ever by the People’s Bank of China and came a week before the government comes out with its latest report on quarterly growth.

Economists expect it will show that growth has slowed for the seventh straight quarter.

It came a day after the International Monetary Fund warned of slowing global growth and lowered China’s outlook for expansion to 7.8 per cent this year, down from July's eight per cent forecast.

China's economic growth fell to a three-year low of 7.6 per cent in the three months ending in June.

Tuesday’s action was the second such stimulus measure in two weeks. The first time, the government bought notes worth 290 billion yuan ($45 billion).

In an additional stimulus move, China's sovereign wealth fund said it would buy millions of shares in Industrial & Commercial Bank of China, the world's biggest bank by market capitalization.

The Shanghai Composite Index climbed two per cent and Hong Kong's Hang Seng rose 0.5 per cent.

The government has cut interest rates twice since June and is also pumping money into the economy through higher investment by state companies and more spending on building subways and other public works.

But authorities are moving more cautiously than they did after the 2008 crisis, when the huge stimulus that helped China rebound also fueled inflation and a wasteful building boom.

With files from The Associated Press