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Chinese shares fall after interest rate rise

Chinese shares fall after interest rate rise
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Chinese shares took a slide on Monday as the impact of China’s Christmas Day interest rate hike took hold.

The People’s Bank of China raised rates for the second time in just over two months – up by 25 basis points to 5.81 percent.

In response, Chinese shares fell by around 1.9 percent when markets opened after the weekend.

Asian shares however bucked the downward trend.

Analysts expect more to come next year as China battles to control spiralling inflation.

In November it reached a 28-month high of 5.1 percent.

Chinese consumers have been hit hard by the inflation.

Food prices are up nearly 12 percent year on year.

The government threatened last month to introduce price controls.

It has offered several flour companies subsidies and warned them not to raise prices and increase wheat supplies.

Imports of staples like meat, sugar and oil are also likely to increase in 2011.