Stocks, materials prices drop on China tightening

09:29, November 15, 2010      

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A possible slowdown in China's economy has had its effect on world equity markets, with stocks dropping from Shanghai to New York, and prices of commodities from oil to grain spiraling down.

A feeling of uncertainty and anxiety spooked investors globally, as Beijing last month raised interest rates and last week hiked banks' required reserve ratio to rein in rising inflation. As CPI hit 4.4 percent in October, the highest in more than two years, analysts predict that the central bank will again raise rate before the end of this year.

On Friday, stocks and commodities took another dive on worries that China might put the brakes on its surging economy. Any cooling of China's economy would slow down demand for raw materials, and that sent prices of oil, metals and grains tumbling.

And, the quarrel among G20 governments on trade and currency issues is to cast a shadow on global economic recovery, analysts believe.

China's Shanghai composite stock index plummeted 5.2 percent and Hong Kong's Hang Seng fell 2 percent, while the Dow Jone industrial average fell 90 points on Friday, led by sharp losses in energy and materials stocks.

Gold fell $37.80, or 2.7 percent, to $1,365.50 an ounce. Crude oil fell $2.93, or 3.3 percent, to $84.88 a barrel, while soybeans plummeted 70 cents, or 5.2 percent, to $12.69 a bushel.

People's Daily Online


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