CHINAS Money Markets were bailed out yesterday to keep rates down...the rates bounced back up on friday after the bail out

[link to www.marketwatch.com]


Interest rates in China's money markets jumped Friday to levels last seen during a crippling cash crunch this summer, as banks continue to struggle to raise funds in the interbank market.

The borrowing costs initially fell early Friday after the central bank said Thursday that it had "recently" injected cash to try to ease stress, but rates later rose higher. Traders said it remains difficult to borrow in the interbank market despite yesterday's central bank pledge to offer liquidity.

The rates, which serve as the funding costs for pricing and investing in bonds, have been trending higher in recent weeks. Until yesterday, the central bank had refrained from adding cash to the system for two weeks in a row.

The stress, though, is starting to take its toll on other markets. China's benchmark Shanghai Composite Index was down 0.9%, while Hong Kong's Hang Seng Index was off 0.4%. It has also led to a sharp spike in government and corporate debt yields in recent months, further burdening a slowing economy and a less profitable corporate sector.

The benchmark weighted average of the seven-day repurchase agreement rate, a measure of short-term funding costs, rose to 7.75%--the highest level since June 21--and compares to Thursday's close at 7.06%. The central bank said yesterday via its Weibo, or microblog

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