Aust stocks set to open lower

The Australian stock market looks set to open lower following sharp falls on international markets amid concern over the emergence of a liquidity crisis in China and the withdrawal of US Federal Reserve stimulus.

The Australian stock market looks set to open lower following sharp falls on international markets amid concern over the emergence of a liquidity crisis in China and the withdrawal of US Federal Reserve stimulus.

At 0658 AEST, the September share price index futures contract was down 32 points at 4601 points.

No major economic or equities news is expected on Tuesday.

In Australia, the market on Monday posted its largest one-day loss in two months as nervous investors looked to steep falls on Asian markets due to fears of a credit crunch in China.

The benchmark S&P/ASX200 index was down 69.7 points, or 1.47%, at 4,669.1 points, while the broader All Ordinaries index was down 72.7 points, or 1.54%, to 4651.1 points.

A crisis in China's banking system has caused lenders to put the brakes on loans.

The rates banks charge to borrow from each other has surged in the past two weeks but the People's Bank of China has refrained from injecting more cash - owing to fears about a growth of bad debt - which has, in turn, weighed on the economy.

Prospects that Beijing would step in to provide money were dashed at the weekend when a commentary by the official Xinhua news agency said there was no shortage of funds in the financial system.

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