Yuan worries sink ST Index 1.06%

THE local stock market continued to be plagued by weak sentiment on Wednesday as the Straits Times Index recorded its third straight fall this week, albeit in slightly improved volume.

Softness in Hong Kong because of a sharp fall in the Chinese yuan was blamed for the weakness here and possibly in the futures market where the Dow futures suffered a 100-point loss. The Hang Seng ended one per cent lower while Europe opened in the red across all markets.

Regional bourses were rattled in the morning when the People's Bank of China (PBOC) unexpectedly cut its daily fixing for the yuan to the lowest level since April 2011, weaker than the yuan's last onshore closing level. The currency fell 0.6 per cent in Hong Kong's freely traded market as well as in Shanghai, with both exchange rates dropping to their weakest levels since at least March 2011.