China stocks fall, money market conditions extend improvement
SHANGHAI, June 25 (Reuters) - Chinese stocks extended losses on Tuesday even as money market rates fell back towards more normal level as the central bank signalled a slight softening in its crackdown on easy credit by opting not to change the amount of cash in the market. The CSI300 index of the largest mainland shares was down 1.7 percent in early trade before paring losses, having plunged more than 6 percent on Monday after the People's Bank of China (PBOC) said liquidity in China's banking system was ample and that banks needed to improve liquidity management. In the money market, the overnight repo rate was at 5.73 percent on Tuesday morning on a weighted-average basis, down from 6.65 percent at Monday's close and an all-time high of 11.74 percent last Thursday . The benchmark seven-day repo rate opened at 5.73 percent on Tuesday, down from 7.53 percent at Monday's close and an all-time high of 11.62 percent on Thursday. At its open market operations window on Tuesday, where it can inject or withdraw cash from the banking system, the PBOC opted to do nothing. It also did not auction any central bank bills, which would have taken funds from the market. Though the market was likely hoping for a fund injection to help ease cash conditions, the passive approach marked a slight softening from last week when the central bank had drained four billion yuan by issuing three-month central-bank bills. . With the central bank skipping both bill and repo issuance on Tuesday, maturing repurchase agreements mean it is on course to permit a small net injection of 25 billion yuan into the banking system this week.