China cuts interest rates

Beijing, June 8 (IANS) China's central bank has cut interest rates by 25 basis points to prevent the economy from slowing further.

The benchmark one-year lending rate will drop to 6.31 percent from 6.56 and the one-year deposit rate will fall to 3.25 percent from 3.5 percent, China Daily reported Friday.

The bank had last cut its interest rates in December 2008. The new rates are effective from Friday.

"Beijing realized if lending costs cannot be effectively cooled, China will face further economic slowdown," said Liu Ligang, head of China economics at the Australia and New Zealand Banking Group Ltd.

Brian Lawson, chief economist at London-based Exclusive Analysis, said the rate cut fits within the overall policy approach of providing stimulus in periods of slowdown.

US and European stocks opened higher Thursday after China announced the rate cuts.

In the first three months of this year, China witnessed the slowest pace of growth in nearly three years, as GDP increased by 8.1 percent year-on-year.