China stocks dive 5 percent on inflation, Ireland

15:13, November 12, 2010      

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China's stocks "has its worst day" in a year on Friday as investors were unnerved by a slowdown of the economy and a possible failure of G20 leaders meeting in South Korea to charter a common course to lift anemic global growth.

Fresh European debt crisis also added to the negative market sentiment. Ireland, one of euro zone's most financially troubled countries, would not be able to cut public spending and may have to resort to a bailout.

The Shanghai composite stock index tumbled more than five percent or 162.31 points, closing at 2985.44 points. The Shenzhen index dived 7 percent to close at 12726.54 points, declining 958.40 points.

The losses followed a down day on Wall Street where Cisco, the world's largest maker of computer networking gear, rattled investors by cutting its sales forecast for a second quarter in a row.

China's official statistics revealed on Thursday said inflation spiked to 4.4 percent in October from 3.6 percent in September, hitting a 25-month high. It is widely anticipated that Beijing will raise interest rates again to dampen precipitating price rises.

Investors too were worried that a failure of G20 summit meeting in Seoul could lead to protectionist trade policies by the major economies that will send the global economy back into recession.

By People's Daily Online


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