Rate cut fails to boost Chinese shares

BEIJING - The incentive to the Chinese shares by the central bank's first interest rate cut since December 2008 lasted for only half-day on Friday, as investors shifted their attention to a string of coming economic data over the weekend.

Concerns over the economic health of the world's second-biggest economy sank the benchmark indices further by about half a percent.

The People's Bank of China (PBOC), the country's central bank, announced Thursday night it would lower the benchmark interest rates by 25 basis points and at the same time give banks more freedom in setting the deposits and interest rates, a significant step towards the liberalization of the interest rates.

Banks are allowed to adjust the upper limit of the floating band of deposit rates to 1.1 times the benchmark while offer a lending rate discount as much as 20 percent.

Boosted by the central bank's rate cut, the Shanghai Composite Index opened 0.57 percent higher but wavered at one point into the negative territory over concerns that the country's economy may slow further in the second quarter.

It picked slightly by 0.14 percent to close at 2,296.24 for the morning break. Pessimism over the economic data to be released this weekend dominated the market in the afternoon session before losing 11.68 points, or 0.51 percent, to close at 2,281.45.

The Shenzhen Component Index rose 0.86 percent at opening but gave up its gains afterwards in a similar course before closing at 9,707.18, down 48.46 points, or 0.5 percent.

The National Bureau of Statistics will release a series of economic indicators on Saturday, including inflation, investment, industrial output growth and social consumption.

The General Administration of Customs will update China's import and export data on Sunday.