SHANGHAI (AFP) — Chinese share prices tumbled to close 7.73 percent down Tuesday, the biggest single day percentage loss in more than a year after the central bank announced new tightening measures, dealers said.
Shares fell across the board following Beijing's latest move to tighten credit conditions, with a number of blue-chip stocks falling the maximum daily limit of 10 percent.
"Investors see the sudden 100-basis-point hike in reserve requirement ratio as a red flag on the economy and they are worried about corporate earnings in the second half," Jacky Zhang at Capital Securities told Dow Jones Newswires.
The benchmark Shanghai Composite Index, which covers A and B shares, closed down 257.34 points at 3,072.33 on turnover of 60.7 billion yuan (8.8 billion dollars).
The key index has fallen nearly fifty percent since a peak last October 16, almost giving up all the gains from a stamp duty cut this April.
It was the index's sharpest fall since June 4, 2007, when it lost 8.26 percent in a day.
The Shanghai A-share Index lost 270.02 points at 3,223.17 on turnover of 60.3 billion yuan. The Shenzhen A-share Index shed 84.99 points at 973.43 on turnover of 28.1 billion yuan.
The People's Bank of China said over the weekend the reserve ratio for commercial banks would rise one percentage point to 17.5 percent in two stages -- 0.5 percentage points on June 15, and 0.5 percentage points on June 25.
The rise, the fifth so far this year, will curb bank lending and could slow both economic growth and investment flows into the stock market.
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