Rate rise fears likely to unsettle market

SHANGHAI stock market is expected to remain weak this week on concern the central bank will raise interest rates to cool inflation.

The benchmark Shanghai Composite Index lost 2.3 percent to 2,642.82 points last week after the People's Bank of China announced it would raise lenders' reserve requirement ratio for the sixth time this year as data showed inflation in May was 5.5 percent, the highest in 34 months.

Shenyin and Wanguo Securities said inflation in June could be even higher, so further monetary tightening is almost unavoidable.

"The market could see further pullbacks in the next two weeks before bottoming out in early July," the brokerage said in a note, forecasting the key index to fluctuate between 2,600 and 2,680 points this week.