China fell back on its major levers to stem the biggest stockmarket rout since 1996 and a deepening slowdown, cutting interestrates for the fifth time since November and lowering the amount ofcash banks must set aside.

The one-year lending rate will drop by 25 basis points, to 4.6percent, effective Wednesday, the Beijing-based People's Bank ofChina (PBOC) said on its website Tuesday, while the one-yeardeposit rate will fall a quarter of a percentage point to 1.75percent. The required reserve ratio will be lowered by 50 basispoints for all banks to cover funding gaps, it said.

China's surprise yuan devaluation on Aug. 11 led to atightening in liquidity as the PBOC subsequently bought itscurrency to stabilize the exchange rate and curb capital outflows.The yuan may face more downside pressure as a result of the latestmonetary easing, making it harder to keep depreciation in check. A22 percent stock market plunge over four days added pressure forbroad stimulus as authorities pull back from other direct effortsto boost equities.

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