Chinese equities hit a three-week low on Tuesday after smaller-than-expected interest rate cuts disappointed investors.

The benchmark Shanghai Composite Index gave up 4.55 percent, or 90.53 points, to 1,897.23. The Shenzhen Component Index fell 342.21 points, or 4.69 percent, to 6,952.91.

Combined turnover was 108.1 billion yuan (US$15.8 billion), up from 97.68 billion yuan the previous day. Losses outnumbered gains by 840 to 32 in Shanghai and 718 to 38 in Shenzhen.

The People's Bank of China, the central bank, on Monday cut interest rates for the fifth time in three months in the government's latest move to stimulate the economy.

The benchmark one-year yuan lending rate fell by 0.27 percentage points to 5.31 percent, effective Tuesday. The one-year yuan deposit rate also fell by 0.27 percentage points to 2.25 percent.

The cuts had been expected but the magnitude was below expectations and too small to buoy confidence, said Guangfa Securities analyst Wan Bing.

Banking shares fell across the board, since the rate cut will narrow lenders' interest-rate spreads and further squeeze their profit margins, said Zhang Xi, an analyst with Galaxy Securities.

The Industrial and Commercial Bank of China, the country's biggest lender, slipped 2.65 percent to 3.68 yuan. Bank of China shed 1.6 percent to 3.08 yuan. Bank of Communications fell 4.28 percent to 4.7 yuan.

China Vanke, the country's largest real estate developer, lost 4.9 percent to 6.98 yuan. Shares of the Poly Real Estate Group Co. fell 6.42 percent to 16.03 yuan. China Life was down 4.77 percent to 19.35 yuan.

(Xinhua News Agency December 23, 2008)