China rate hike hits stocks, commodities
19 Oct 2010
Oil prices fell and stocks pared gains in Europe and the dollar rose across the board after a surprise hike in China's official bank rate announced today.
The announcement drove down Shanghai stock stocks more than 3 per cent, as investors were caught off guard by China's tightening move.
The People's Bank of China raised the benchmark deposit and lending rates by 25 basis points each in a move to stem rising domestic asset prices and rising inflation.
Oil prices fell and the dollar rose across the board after the announcement.
China's inflation is picking up momentum and the bank fears it will keep investors nervous.
The rate hike will also affect property shares, which will again be hit hard as the rate hike increases their borrowing costs from banks.
