December 15, 2016 / 7:15 AM / a year ago

China stocks at fresh one-month lows after Fed rate decision

SHANGHAI, Dec 15 (Reuters) - China stocks slid to one-month lows on Thursday, after the U.S. Federal Reserve raised interest rates and signalled a faster-than-expected pace of policy tightening.

Strength in small-caps was offset by a tumble in banking shares, triggered by a dramatic sell-off in bond markets that raised the spectre of liquidity crunch in the banking system.

The blue-chip CSI300 index fell 1.1 percent, to 3,340.43 points, while the Shanghai Composite Index lost 0.7 percent to 3,117.68 points, their lowest levels since early November.

Several contracts of China’s five- and 10-year treasury futures fell to their daily limit on Thursday, fuelling liquidity concerns, and raising doubts over the health of banks, which have large bond holdings.

Further souring sentiment was the yuan, which fell to its weakest level in more than eight years against a broadly stronger U.S. dollar on Thursday.

All main sectors lost ground, led by energies and financials, which slumped their most in six months.

Shenzhen shares steadied somewhat, as tech stocks rose following a steep fall. (Reporting by Luoyan Liu and John Ruwitch; Editing by Richard Borsuk)

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