European stock markets dropped sharply Friday after fresh worries over rate hikes sent shares tumbling in Shanghai, and as worries over Ireland’s debt levels rattled investors.

The People’s Bank of China may raise its benchmark one-year lending rate to 5.81 percent by year-end from 5.56 percent, according to the median forecast of 11 analysts surveyed after yesterday’s price data. The deposit rate may climb to 2.75 percent from 2.5 percent, they said.

Shanghai index dropped 5.2%. The MSCI Asia Pacific Index lost 1.4 percent to 132.33 as of 5:50 p.m. in Tokyo and the Shanghai Composite Index sank the most since August 2009. The Stoxx Europe 600 Index decreased 1.3 percent and Standard & Poor’s 500 Index futures slid 1.1 percent.

Metals, grains and oil fell. Zinc for three-month delivery fell as much as 4.7 percent in London and tumbled by the 5 percent limit in Shanghai after China sold 49,993 tons of ingots at auction to cool domestic prices. Cotton also dropped by the daily limit in China, after having doubled since the beginning of September to reach a record high on Nov. 10. Sugar declined by 5 percent in China.

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Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
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