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Weak EU trumps slowing inflation to push stocks down
By Lu Nengneng |
December 9, 2011, Friday
|
Online Edition
Online Edition
SHANGHAI'S key stock index extended yesterday's loss today as investor sentiment continued to weaken on the uncertain European economic outlook, despite China's lower-than-expected inflation data for November.
The benchmark Shanghai Composite Index retreated 0.62 percent to 2,315.27 points. Turnover shrank to 38.9 billion yuan (US$6.1 billion) from yesterday's 49.2 billion yuan.
China's inflation eased to a 14-month low, sliding to 4.2 percent in November from last month's 5.5 percent. And the producer price index, a measure of costs for companies, dropped to a 27-month low of 2.7 percent in November, the National Bureau of Statistics said today.
But the fact that China's inflation-curbing strategy is gradually paying off was overshadowed by the possibility that Europe might skid further towards the debt crisis abyss, as the European Central Bank President Mario Draghi signaled no intention to expand its bond-purchasing program.
Though the central bank has trimmed its main interest rate to 1 percent yesterday and pledged long-term funds for commercial banks, it failed to inspire confidence among investors, who staged a general sell-off in Europe and the US.
Taking cues from the tumbling overseas markets, financial stocks remained weak in Shanghai, especially after the yuan hit the low end of its permitted trading range against the US dollar for the eighth day today. Industrial Bank sank 0.95 percent to 12.53 yuan. China CITIC Bank fell 0.73 percent to 4.09 yuan.
Resource shares also led the retreat as a looming economic recession has weakened global demand, which puts greater pressure on their already excessive output.
Jiangxi Copper, China's largest producer of the metal, slid 1.7 percent to 24.27 yuan. Aluminum Corporation of China dipped 0.39 percent to 7.65 yuan. Inner Mongolia Baotou Steel slumped 2.92 percent to 4.32 yuan.
The benchmark Shanghai Composite Index retreated 0.62 percent to 2,315.27 points. Turnover shrank to 38.9 billion yuan (US$6.1 billion) from yesterday's 49.2 billion yuan.
China's inflation eased to a 14-month low, sliding to 4.2 percent in November from last month's 5.5 percent. And the producer price index, a measure of costs for companies, dropped to a 27-month low of 2.7 percent in November, the National Bureau of Statistics said today.
But the fact that China's inflation-curbing strategy is gradually paying off was overshadowed by the possibility that Europe might skid further towards the debt crisis abyss, as the European Central Bank President Mario Draghi signaled no intention to expand its bond-purchasing program.
Though the central bank has trimmed its main interest rate to 1 percent yesterday and pledged long-term funds for commercial banks, it failed to inspire confidence among investors, who staged a general sell-off in Europe and the US.
Taking cues from the tumbling overseas markets, financial stocks remained weak in Shanghai, especially after the yuan hit the low end of its permitted trading range against the US dollar for the eighth day today. Industrial Bank sank 0.95 percent to 12.53 yuan. China CITIC Bank fell 0.73 percent to 4.09 yuan.
Resource shares also led the retreat as a looming economic recession has weakened global demand, which puts greater pressure on their already excessive output.
Jiangxi Copper, China's largest producer of the metal, slid 1.7 percent to 24.27 yuan. Aluminum Corporation of China dipped 0.39 percent to 7.65 yuan. Inner Mongolia Baotou Steel slumped 2.92 percent to 4.32 yuan.
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