China's stock market plunged on Monday. The Shanghai Composite Index fell 5.3 percent to 1,963.24, the weakest close since 3 December 2012.
The fall came amid signals from the People's Bank of China that it will do little to alleviate the ongoing liquidity crunch. AFP/CNA reports:
China's central bank has urged lenders in the country to strengthen liquidity management, according to an official note published on Monday, in a sign Beijing does not intend to loosen policy despite a recent credit crunch.
"Currently, overall liquidity in the domestic banking system is at a reasonable level," said the statement dated June 17 that was issued to banks across the country...
It asked lenders to "prudently manage liquidity risks that may result from overly fast credit asset expansion".
"All financial institutions should... maintain credit growth at a stable and moderate level," it added.
It also urged large commercial lenders to "cooperate with the central bank to stabilise the market".
Stocks also fell in the rest of Asia, Europe and the US.
US Treasury yields were little changed by the end of the day though after having jumped earlier.
Signs of economic improvement on Monday did little to boost markets.
In the US, the Chicago Fed National Activity Index increased to -0.30 in May from -0.52 in April. The three-month moving average fell to -0.43 in May from -0.13 in April though, indicating that growth remained below its historical trend.
In Germany, the Ifo institute’s business climate index rose to 105.9 in June from 105.7 in May.
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