SHANGHAI, Sept 12 (Reuters) - China's blue chip stocks tumbled the most in three months on Monday, tracking a sharp retreat in global markets as investors were spooked by talk of a possible U.S. rate hike next week, sending bond yields up and pressuring the Chinese currency.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 1.7 percent, to 3,262.60, posting its biggest percentage loss since June 13.
The Shanghai Composite Index lost 1.8 percent to 3,021.98 points, booking the worst day since July 27.
Investors were concerned that the U.S. Federal Reserve would raise interest rates as early as next week, after Boston Fed President Eric Rosengren said in a speech on Friday that gradual interest rate increases might be in order with the U.S. economy at full employment and that low interest rates were increasing the chance of an overheated economy.
China's state-owned banks sold dollars to keep the currency stable in the morning trade after the Chinese central bank sharply weakened its official fixing, two traders told Reuters. (Reporting by the Shanghai Newsroom; Editing by Shri Navaratnam)