World markets fall as oil hits 26-month high
World markets tumbled on Monday as fears grew that China’s attempt to control inflation could hit the tentative economic recovery in the West.
By Garry White
27 Dec 2010
Soaring oil prices, which hit a 26-month high, also unsettled investors, with losses seen from Shanghai to Wall Street.
It came amid mounting fears that China’s unexpected rise in interest rates could derail growth in Asia and damage an upturn for the world’s major exporters.
On Christmas Day, the People’s Bank of China raised its benchmark rate by 25 basis points to 5.81pc, as the country grapples with rampant food inflation and rising wage demands.
However, analysts believe that tightening measures by Beijing may curb growth only slightly. On Boxing Day, analysts at JP Morgan Chase trimmed their 2011 growth forecast for the Asian economic powerhouse to 9pc from 10pc.
China’s Shanghai Composite Index slid 1.9pc on Monday, the most the index has fallen since November.