Two of the country's biggest state-run banks are encouraging their branches to step up mortgage lending to shore up the country's weakened housing market, which is hobbling China's growth.

Agricultural Bank of China Ltd, the country's third-largest lender by assets, said Thursday that it would further boost lending to the housing sector, giving priority to home buyers. The bank said it would speed up loan approvals to meet demand.

Bank of China Ltd, the fourth-biggest bank, said it encouraged its branches to make more mortgages available and to offer competitive lending rates compared with other big banks. It also encouraged branches to coordinate efforts with local governments and their specific housing policies to support home buyers' needs.

The banks didn't disclose any specific changes in lending practices. One Bank of China official said branches could receive further instructions later.

It wasn't clear whether China's other two major banks would follow. Industrial & Commercial Bank of China Ltd, China's biggest lender, said it would prepare for a possible change of policy. China Construction Bank Corp, the second-biggest lender, said it hasn't changed its mortgage policy, but it hoped regulators would further clarify guidelines for lending to first-time home buyers.

The moves come as Beijing looks for ways to nudge the property market back to health. The Chinese economy expanded 7.4 per cent year over year in the six months to June, down from 7.7 per cent last year and much slower than rates recorded in previous years. Economists warned that the sagging real-estate market is the biggest threat to the Chinese economy, as the latest data suggest housing-market weakness is spreading.

The property sector accounts for more than one-fourth of China's economy, affecting everything from building materials to home appliances.

Housing sales in China fell 10.9 per cent in the first eight months of 2014 from the same period last year, according to official data.

Central-government officials in recent months have allowed local governments to ease back on measures put in place in previous years to deal with property bubbles. In May, representatives of the central bank met with officials at the top banks in an effort to encourage more mortgage lending.

More than 30 local governments have relaxed restrictions on home purchases this year. Some cities, including Fuzhou, Hangzhou and Qingdao, have rolled out rules that allow buyers who have paid off mortgage loans to be considered as first-time home buyers and enjoy preferential interest rates.

Beijing has refrained from using either large-scale government spending or aggressive monetary easing to rekindle growth. Instead, authorities have relied more on targeted credit easing for banks, such as cutting reserve-requirement ratios for rural and city lenders and injecting funds into several state banks.

Bank of China's Institute of International Finance said in a report Thursday that banks are expected to loosen credit to support the country's housing market if the slump continues to spread.

Further loosening measures, including cutting down payments and providing interest-rate discounts for people making their first purchase of a home, are likely to be rolled out, the bank said.

Chinese police have arrested the publisher and general manager of one of the country’s most influential business publications. The arrests are believed to be connected with allegations the paper was involved in an extortion scheme.

China’s government has accused the 21^st Century Business Herald website of extorting money from business in exchange for either glowing coverage or withholding negative stories. The companies often paid up in the form of advertising orders.

The publisher of the 21^st Century Business Herald Shen Hao is one of the most respected journalists in China and has strong liberal views. He wrote to editorial staff about the need to maintain journalistic standards and integrity just weeks before his detention, according to an internal seen by Caixin, a Chinese business publication.

The 21^st Century Business Herald is part of Nanfang Media Group, a more liberal leaning and reformist media group based in the prosperous province of Guangdong.

Data, data, data

The 'top shelf' indicators return in Australia in the coming week. In China the purchasing managers’ indexes are released. And in the US, arguably the most important monthly indicator -- the employment or non-farm payrolls data -- is issued.

In Australia, the week kicks off on Tuesday when the Reserve Bank releases the Financial Aggregates publication, a report that includes private sector credit or loans outstanding together with money supply indicators like M3. And the ANZ/Roy Morgan weekly consumer confidence rating is also issued on Tuesday.

Housing continues to be the main lending driver but the gains in business and consumer borrowings over the past couple of months have also been encouraging. Business conditions are healthy and it seems to be translating to a lift in business borrowings, with annual growth in June and July at 3.4 per cent -- a 22-month high. Credit probably lifted 0.4 per cent in August or 5.1 per cent over the year, which would mark the strongest growth in five years.

On Wednesday, retail trade data is released. Sales figures have been particularly encouraging in the last couple of months, having risen by 0.4 per cent in July after a 0.6 per cent increase in June. Annual spending growth is holding at a healthy rate of 5.9 per cent, well above the decade average of 4.3 per cent. Even more encouragingly, non-food spending has lifted in recent months. The more upbeat confidence readings and warm weather should have encouraged some early lift in Spring-related spending.

The Performance of Manufacturing index is also issued on Wednesday alongside the RP Data Home Value index for September. The falling Australian dollar should help boost manufacturing activity in coming months while home prices probably fell by 0.5 per cent in September after an outsized 4.1 per cent gain in the prior three months.

On Thursday, August international trade figures are released alongside building approvals data for the same month. The building approvals data is arguably more important than the trade deficit nowadays, serving as a leading indicator for home and commercial building. The problem is that the data is ‘lumpy’ with approvals down 5.5 per cent over April, up 10.1 per cent in May, down 3.8 per cent in June, only to rise 2.5 per cent in July. More importantly approvals are up almost 10 per cent on a year ago.

On Friday, the Performance of Services index is issued alongside data on new car sales and new home sales. Little improvement is expected in the services gauge in September, but certainly readings are tipped to lift in coming months. And new car sales probably tracked sideways over September.

Overseas: US jobs data back in the spotlight

In the US, the week kicks off on Monday with the release of personal income and spending figures together with the pending home sales index and Dallas Federal Reserve business index. Economists tip a healthy 0.5 per cent lift in spending, only partly funded by a 0.3 per cent lift in income. If the data meets expectations, it will support speculation of higher US rates ahead.

On Tuesday, the Case-Shiller home price index is released in the US together with consumer confidence, the Chicago purchasing managers survey and weekly chain store sales. Home prices may have edged up 0.1 per cent while little change is tipped in consumer confidence.

On Wednesday the ADP national employment index is released together with auto sales, the ISM manufacturing survey, construction spending and the weekly report on mortgage transactions – purchases and refinancing. Economists tip a 200,000 lift in private jobs – a precursor to Friday’s official job report.

On Thursday, the weekly data on claims for unemployment insurance is issued together with factory orders and the ISM New York index.

On Friday in the US, the spotlight shines brightly on the September job report. Economists tip a 205,000 lift in jobs, up from 142,000 in August, while the jobless rate is seen unchanged at 6.1 per cent. This is a potential market mover in every way. A strong job report will boost the US dollar further, put pressure on commodity prices and unnerve investors in Asia and Europe.

In China, the official purchasing managers’ index for manufacturing is released on Wednesday with the services variant on Friday. The HSBC purchasing managers’ index is released on Tuesday.

Aussie dollar

The Aussie dollar may have depreciated by 6 per cent in the past two months, but the other side of the equation is the fact that US dollar has been rising. Not only has the US dollar index risen for 10 straight weeks, it has gained 5.6 per cent over that time to four-year highs.

So the weaker Aussie dollar is very much a byproduct of US dollar strength. However the grounds for on-going US dollar strength are a little fragile. Sure, the US economy is strengthening, but apart from a small minority, Federal Reserve policymakers don’t appear in a rush to be lifting interest rates. If US economic data softens and policymakers confirm no rush to lift rates, then the Aussie may start recouping some recent losses.

Craig James is chief economist at Commsec and Savanth Sebastian is an economist at Commsec.

HONG KONG—As pro-democracy rallies spread across Hong Kong on Monday, the government offered minor concessions and police defended the use of tear gas against protesters over the weekend.

Tens of thousands of people stretched across Hong Kong Island's main shopping and business districts and across Victoria Harbour into Kowloon. Newcomers joined the protests, which took on an air of spontaneity, growing as the day progressed with marchers walking and sitting on the city's normally traffic-choked roads. (Read The Wall Street Journal's live updates on the protests here.)

Few police and almost none wearing riot gear were seen near the protesters, who were inundated with food, water and protective gear by supporters. There appeared to be no central organizing authority. "If I must name a leader of the movement, it is Hong Kong itself," said Amy Wong, a university student who said she joined protests out of anger at the tactics used by police.

The protests stayed peaceful and there has been no serious damage reported, even during the confrontations with police. On Monday morning, protesters bagged garbage from the night before, sorting plastic bottles for recycling. Protesters started calling their quest the Umbrella Revolution for the umbrellas they carried to deflect both pepper spray and the hot sun and were decorating them with phrases such democracy and freedom.

The protests are driven by Beijing's decision to impose limits on how Hong Kong elects its leader. But after the police repeatedly used tear gas against protesters on Sunday, support for the protests grew among Hong Kong residents angry over tactics not seen in the city for nearly a decade.

Throughout the day, the crowds erupted in spontaneous chants calling for the resignation of Hong Kong Chief Executive Leung Chun-ying, whom they see as responsible for both the election limits and the use of force on Sunday. Protest leaders and pro-democracy lawmakers also called for Mr. Leung to quit. Legislator Alan Leong said his coalition was drafting a motion for impeachment of Mr. Leung.

"We call upon the chief executive to resign. It's the only way he can beg for forgiveness," Mr. Leong told reporters.

The size of the protests and their peaceful nature underlines the dilemma for Beijing, which doesn't want other parts of China to follow Hong Kong's path, but would have trouble justifying a tough crackdown on the protesters.

Hong Kong's financial sector was hit by the protests Monday. Stocks fell 1.9%, hitting their lowest level in 2½ months and 23 banks closed more than 40 branches, offices or cash machines. Accounting firm KPMG LLG told its 1,800 employees in affected offices to stay home while the Hong Kong Monetary Authority, the city's de facto central bank, said it activated its own contingency plan and was ready to inject liquidity into the system. Markets operated normally on Monday.

Chief Secretary Carrie Lam, the city's No. 2 government official, went back on a statement she made Sunday that the process geared at approving Beijing's plan on elections was moving ahead swiftly. Instead, she said the city would delay the process. But she also said it would be unrealistic to ask Beijing to reverse its decision.

Beijing has agreed to grant the city's residents the right to vote starting in 2017 but only for candidates approved by a committee made up of 1,200 largely pro-Beijing, pro-business members. Currently the committee picks the chief executive without a popular vote.

The process still officially has several months to go, with another around of public consultations and a vote planned in the city's legislature. Protesters are calling for the process to start over and for Hong Kong's people to get full control over selecting their next leader.

Beijing has taken a hard line over the dispute over democracy in Hong Kong, issuing warnings to protest organizers, including students and the activist group called Occupy Central. At a briefing at China's Foreign Ministry, spokeswoman Hua Chunying, asserted Beijing's control over the city. "As we have always maintained, Hong Kong is China's Hong Kong," she said.

"We firmly oppose external forces supporting illegal activities, such as the Occupy Central movement," she said, a reference to a view of Hong Kong as a potential base for foreigners to exercise influence behind the scenes that could hurt China.

The White House on Monday urged authorities in Hong Kong to respond to pro-democracy protests with restraint. "We believe that an open society with the highest possible degree of autonomy, and governed by the rule of law, is essential for hong Kong's stability and prosperity," White House spokesman Josh Earnest said.

Mr. Earnest said the U.S. is closely watching the protests. "We support the aspirations of the Hong Kong people," he said.

Police came under strong criticism for their tactics on Sunday and early Monday. As crowds grew at the city's government headquarters, police blocked entrances. The result was the protest expanded to fill the city district of Admiralty. After police used tear gas, the protests spread to two shopping districts, Causeway Bay and Mong Kok.

Several security experts said police mishandled the situation.

"They really shouldn't have used any tear gas at all because ultimately it only had the effect to annoy people; the crowds were peaceful," said Julian Russell, a security consultant who worked on the police force when Hong Kong was under British rule.

In a news conference Monday, Assistant Police Commissioner Cheung Tak-keung said the decision to use tear gas and pepper spray on Sunday was made after some protesters used violence to breach police lines. He said the police had no alternative and described the option as "minimum force."

"Police respect citizens' right to use peaceful, rational, legal means to protest. But some protesters used violence to push through the police defense line, which we strongly condemn," Mr. Cheung said.

The protests began with a weeklong student boycott and rallies that led to the first battle with police on Friday night. On Sunday, the group called Occupy Central, which had pledged to disrupt the city's main business district if democratic reforms were blocked, joined in.

But by Monday, it appeared clear that protest groups were forming on their own. Occupy Central organizer Chan Kin-man said he was impressed with the spontaneity and resolve of the protesters. "The people outside, on the street, they are leaderless," he said.

Protesters used social-media sites to move protesters and supplies. Messages such as "Water and goggles are needed in Admiralty" brought a deluge of supplies, sometimes by motorcycle. Among the supplies were the now- ubiquitous umbrellas, used to deflect pepper spray and also to block the hot sun.

Protesters were downloading FireChat, which allows communication via Bluetooth if telecom networks are shut down.

The protests have been largely peaceful and there has been no serious damage reported. On Monday morning, protesters bagged garbage from the night before and sorted plastic bottles for recycling.

Monday began with a small number of exhausted protesters scattered in the city. At lunch hour, supporters swelled their numbers in three districts. Many stayed while others brought supplies. Ray Chung, an accountant, brought a box of bottled water and some bread to support protesters on his lunch hour. "I can't go on strike as my firm is too small," he said. "So I do this as a way of showing my support."

This week is a major shopping week in Hong Kong because of a weeklong holiday in mainland China, and October is the second biggest month of the year for retailers. Sales have been weak this year amid China's economic slowdown and crackdown on corruption. Data released Monday showed that Hong Kong retails sales were up 3.4% in August from a year earlier, but sales of jewelry, watches and valuable gifts, a key sector for Chinese tourists, fell 6.1%

The city's political turmoil will "add salt to the wound" of Hong Kong's retail sector, according to Raymond Yeung, a senior economist at ANZ.

—Prudence Ho in Hong Kong and Bob Davis in Beijing contributed to this article.

BEIJING—As Hong Kong's pro-democracy protests dominated news and online discussion globally, China's state-controlled media has offered critical but relatively muted coverage of the city's most serious display of public dissent in years.

Chinese newspapers and news outlets on Monday, citing reports by the official Xinhua News Agency, said protesters were "disrupting social order and stability" on Sunday by "illegally" occupying public spaces in Hong Kong's business district. By contrast, Hong Kong and foreign media largely focused on police conduct, especially the use of pepper spray and tear gas, which are unusual in a city known for peaceful protests.

On China's widely watched noon national news broadcast, state-controlled China Central Television aired a brief report from Chinese officials criticizing Hong Kong's pro-democracy movement. It didn't show images of the demonstrations or police efforts to break them up. The national evening news broadcast made no mention of the protests.

Xinhua's Chinese-language reports focused on comments by Hong Kong Chief Executive Leung Chun-ying and a spokesperson for the Chinese government's office for Hong Kong and Macau affairs, which condemned "illegal" activities by the pro-democracy protesters. Hong Kong is a Chinese city but operates under separate laws.

Roughly 20 Chinese newspapers published those Xinhua reports, and all did so "deep in the inside pages," according to the China Media Project, a research group from the University of Hong Kong's Journalism and Media Studies Center. As of midday Monday, "most major news sites had no prominently placed coverage at all," the group wrote on its blog.

An exception was the Global Times tabloid, which published a front-page report on the protest in its Chinese-language edition, describing Sunday's events as "violent clashes" that "are a cause of concern for all who care about Hong Kong's future." It also focused on the Chinese government's criticism of the pro-democracy protests.

Xinhua, however, did offer more details in an English-language report. Tens of thousands of "protesters violently charged the police cordon line on Sunday and illegally blocked several key roads," said the report published late Sunday. "When repetitive warnings ended in failure, the police fired volleys of tear gas to disperse the demonstrators." The English-language China Daily, meanwhile, said Sunday's protests "spun out of control."

The People's Daily—the Communist Party's flagship paper—published an editorial online Monday afternoon titled "No one cares more about Hong Kong's future than the entire Chinese people."

"The despicable move by some Hong Kong extremists to coerce young students into joining the farcical "Occupy Central" movement has proven that they are at their wits' end," it read. "Their acts in damaging normality and disrupting Hong Kong's economic development deviates from the democratic principles they exhort; the Hong Kong people's support for the central government's decision will only strengthen and unify."

On Chinese social media, discussions on the Hong Kong protests were mainly critical of the movement—known as Occupy Central, after a major Hong Kong business district—and supportive of Beijing's stance. However, that appeared to be the result of state censorship, analysts and activists said.

Censorship levels seen on the Weibo social-media service escalated over the weekend, according to Fu King-wa, an assistant professor who leads the Weiboscope censorship-monitoring project at the University of Hong Kong.

Some 152 out of every 10,000 Weibo posts were deleted Sunday, up from 98 deletions per 10,000 posts Saturday, and about five times the daily average seen in the first five days of last week, said Mr. Fu, who uses software that checks for post deletions in a sample of roughly 50,000 to 60,000 Weibo users with large followings. Many of the posts deleted over the weekend mentioned terms like "Hong Kong" and "police," he added.

Representatives for Weibo Corp. didn't immediately respond to a request for comment.

According to Free Weibo, a website that collects posts removed from Weibo, many of the deleted items mentioned Occupy Central and discussed unrest or police activity in Hong Kong—whether those posts were critical or supportive of the pro-democracy movement.

"Hong Kong is the experimental ground for the 'One country, two systems' framework, the success or failure of which is pivotal—the Taiwanese public is watching," a Weibo user wrote in a censored post, according to Free Weibo.

"Wishing the Hong Kong Occupy Central people well, and hoping that the Hong Kong media can honor their pledge of being 'Hong Kong's conscience,' " another user wrote in a post that was removed.

For the most part, the commentary that remained on Weibo was critical of Occupy Central and its supporters.

In two widely read Weibo posts, veteran Hong Kong actor Law Kar-ying said "Occupy Central is the culprit" responsible for bringing a "foul, smoggy atmosphere" to Hong Kong, and said the student protesters—who form a large segment of the movement—were being "manipulated" by agitators with "ulterior motives."

"Being content, well-behaved and knowing one's place is the right way," Mr. Law wrote on his verified Weibo account Sunday. "We see so many places elsewhere pursuing democracy, but haven't succeeded to date—seems like it isn't an omnipotent elixir."

HONG KONG—Tension following pro-democracy protests was expected to deal a blow to Hong Kong's retail sector during one of the city's busiest shopping periods, with fears growing that the city could slip into recession.

The political turmoil comes ahead of China's weeklong National Day holiday, which usually brings Hong Kong a flood of mainland tourists eager to shop. As a result, October usually accounts for Hong Kong's second-biggest retail sales period, after December. (Read The Wall Street Journal's live updates on the protests here.)

"The chance of Hong Kong running into a technical recession in the third quarter is pretty high," said Raymond Yeung, a senior economist at ANZ, calling the turmoil "salt to the wound" of the city's economy.

"If you have a strong retail sector that continues to be vibrant, that would provide some offset to the slowdown in cross-border trade," but the city's turmoil raises fears that retail sales will be affected during the vital shopping period, he said.

While business in much of Hong Kong returned to normal during the day Monday, banks shut branches, suspended some services and activated contingency plans to deal with disruptions as pro-democracy protests continued to grip several areas. Crowds were swelling to even larger numbers as night fell on the city.

Hong Kong's reputation as a hub for global capital entering Asia could be dented if the protests worsen, said Philippe Espinasse, a former investment banker in the city who now writes on banking and finance.

"Investors very much like visibility and certainty and could therefore become concerned about the stability of the market if the situation deteriorates significantly," Mr. Espinasse said.

The Hong Kong Monetary Authority, the city's de facto central bank, said it has activated its own contingency plan and is ready to inject liquidity into the banking system. The HKMA said it expects the city's money markets to operate as normal.

Fitch Ratings, meanwhile, said Monday it is unlikely the protests would be large or widespread enough to have a "material effect on the economy or financial stability" of the city.

In its first contraction in three years, Hong Kong's economy shrank 0.1% in the second quarter as private consumption weakened. A technical recession is defined as two quarters of economic contraction.

Aidan O'Meara, president of VF Asia Pacific, whose brands include Timberland, North Face and Vans, said he expects the company's sales in Hong Kong to be "significantly impacted" during the holiday week. VF said it closed some stores in the city early Monday evening, at the recommendation of malls and department stores.

"We are monitoring the situation closely and hoping for a peaceful, speedy and enduring resolution to the protests," Mr. O'Meara said.

Fewer mainland visitors could weigh on other retailers as well, and ripple through to other parts of Hong Kong's economy, according to Caroline Mak, chairman of the Hong Kong Retail Management Association, a trade group.

Ms. Mak said if weak retail sales persist in Hong Kong, it could lead to the retail industry's first full-year contraction in recent years. The last full-year contraction in retail sales in terms of value was 2003.

Mainland Chinese tourists are seen as a backbone of the city's tourism and retail industry, with nearly 41 million Chinese tourists visiting Hong Kong last year. Yet China's slowing economy and a crackdown on corruption has stymied luxury spending in Hong Kong.

The government said Monday that Hong Kong retail sales rose 3.4% in August from a year earlier to 40 billion Hong Kong dollars (US$5.15 billion), an increase retailers attributed largely to sales ahead of the Mid-Autumn Festival, which fell this year in early September. But luxury-goods sales—a closely watched segment on account of mainland tourist shoppers' fondness for jewelry, watches and valuable gifts—fell 6.1% in August.

Luxury goods players are "highly exposed" to Hong Kong, which makes up 10% of global sales for brands like Gucci, and about twice this proportion for watch and jewelry makers, wrote Luca Solca, a managing director at Exane BNP Paribas, in a report Monday.

"The escalation of student protests in Hong Kong deserves full investor attention," Mr. Solca said.

Travel from destinations other than China may be hit as well: Australia and Italy issued travel advisories for Hong Kong on Monday.

Meanwhile, the U.S. Consulate and the American Chamber of Commerce in Hong Kong issued statements urging restraint after a tense weekend of standoffs between pro-democracy protesters and police in the city. The U.S. Consulate stressed it wasn't taking sides in the debate on Hong Kong's political development.

Hong Kong businesses say they are cautiously watching the developments.

If other countries follow Australia's and Italy's lead in issuing travel advisories, it could have a "major impact" on Hong Kong's tourism industry, warned Michael Li, executive director at the Federation of Hong Kong Hotel Owners, noting that October is a peak travel period for business travelers, who come to the city for trade fairs and exhibitions.

The number of mainland tour groups that had signed up to come to Hong Kong this week was already down at least 20% from the prior year before the protests began, said Steve Lam, an executive at the Hong Kong Inbound Tour Operators Association. The political upheaval could lead some travelers to scrap plans to come to Hong Kong at the last minute, according to Mr. Lam.

The impact on Hong Kong's economy will depend on the length and severity of the protests.

"If the situation deteriorates, it would have a domino effect across the service sector in Hong Kong. From tour operators, restaurant owners to retailers, all of their businesses would be affected," said Dennis Chan, managing director of travel operator Uni Travel (HK) Ltd.

Mr. Chan said some Hong Kong hotels have already adjusted room rates down 5% after this weekend's protests.

The founder of Chinese telecommunications giant Huawei has reportedly announced plans to invest 1.5 billion euros ($A2.1 billion) in France to develop smartphones.

Ren Zhengfei, who met French Prime Minister Manuel Valls in Paris, said Huawei's plan would be carried out over three years, the online edition of Les Echos business daily reported.

"Our investments will have a significant impact on our global innovation, while boosting France's competitiveness in new technologies and creating jobs for French talent," said Ren, according to the report.

Huawei is looking to increase the number of its European providers and is already working with some major French groups such as STMicro, which provides components for its smartphones, Les Echos said.

The announcement comes on the heels of Huawei's opening on September 12 of a new European research and development centre at the Sophia-Antipolis technology park near Nice in southern France.

In the Paris region, the Chinese in particular want to hire designers so that its smartphones "are recognisable at first sight", said Francois Quentin, president of Huawei France.

In late July, Huawei ranked number three in the world for the sale of smartphones, nearly doubling its sales in a year to 20.3 million phones, grabbing 6.9 per cent of the global market, compared with 11.9 per cent for Apple and 25.2 for Samsung, according to telecoms market research group IDC.

Huawei's turnover in Europe was 5.2 billion euros in 2013 and it expects to employ a total of 13,000 people there by 2017.

Taiwan's president has thrown his weight behind Hong Kong's democracy protesters, saying he was "very concerned" by events in the city and urging China to proceed with "peaceful and cautious measures".

Hong Kong police fired tear gas on Sunday at demonstrators enraged by China's refusal to grant full democracy to the semi-autonomous city, with thousands remaining on the streets into Monday.

Taiwan's President Ma Ying-jeou said the protesters' call for free elections had his full backing.

"We fully understand and support Hong Kong people in their call for full universal suffrage," Ma told a gathering of business leaders in Taipei.

"Developments in Hong Kong have drawn the close attention of the world in the past few days. Our government has also been very concerned," he added.

"We urge the mainland authorities to listen to the voice of Hong Kong people and use peaceful and cautious measures to handle these issues."

Ma's administration watches events in Hong Kong closely as Beijing wants Taiwan to reunite with the mainland under a "one country, two systems" deal similar to that through which Hong Kong is ruled.

The deal, agreed when former colonial power Britain handed Hong Kong back to China in 1997, grants civil liberties not seen on the mainland, including freedom of speech and the right to protest.

Ma has sought to boost ties with China since he took office in 2008, but he has rejected reunification under a Hong Kong-style arrangement.

While voicing support for the protesters, he also urged them to refrain from violence, warning that the unrest in the city could send shockwaves through the wider Asian economy.

"Hong Kong is a global financial centre. Any political turbulence may impact on Asia and even the world," Ma said.

"We also call for Hong Kong people to use peaceful and rational methods to highlight their appeal. Any conflict would be the last thing we would like to see."

The protests come after Beijing said Hong Kong could hold elections for its next leader in 2017 but would insist on vetting the candidates, with activists deriding this as "fake democracy".

Ma said both Hong Kong and the mainland would benefit from allowing free elections in the city.

"It is generally believed that Hong Kong will be able to move towards democracy step by step," he said.

"It is our belief that it would be a win-win situation for both Hong Kong and the Chinese mainland if universal suffrage could be adopted."

VOXEU

The Lehman Brothers bankruptcy tipped the world into its worst economic crisis since the Great Depression. The recovery has been slow and weak -- even in those economies such as the US that emerged first from the acute phase of the global crisis. Emerging markets did better during the crisis, but have recently slowed down. Some, such as China, are seeing marked increases in leverage that raise the odds that they will experience home-grown crises in the future.

To understand the length and depth of the crisis -- as well as the weak recovery -- it is essential to analyse the role of debt dynamics. In the 16th Geneva Report on the World Economy, we conduct a deep dive into the details of global debt dynamics over the past decade. This includes consistent comparisons across regions and sectors and an emphasis on the interaction of debt and income. We provide a multi-dimensional perspective on leverage for both advanced and emerging economies. Our comprehensive approach includes both public and private debt, with the latter broken down on sectoral lines (households, non-financial corporates, financial sector). Moreover, we take into account national adding-up constraints by relating sectoral debt levels to the overall international investment position.

What deleveraging?

Contrary to widely held beliefs, the world has not yet begun to delever. Global debt-to-GDP is still growing, breaking new highs. Figure 1 shows the evolution of total debt (excluding the financial sector) for our global sample (advanced economies plus major emerging market economies). While there was a pause during 2008-09, the rise of the global debt-GDP ratio recommenced in 2010-2011. Data in the report also show that debt-type external financing (leverage) continues to dominate equity-type financing (stock market capitalisation).

Figure 1. Global debt-to-GDP ratio, 2001-13

As Figure 2 shows, global debt accumulation was:

• Led by developed economies until 2008; but
• Has been led by emerging economies since 2008; the sharp rise in Chinese debt is especially striking.

These emerging markets as a group are an important source of concern in terms of future debt trajectories. China and the so-called ‘fragile eight’ could find themselves in the unwanted role of ‘host’ to the next phase of the global leverage crisis.

Figure 2. Debt dynamics for a selection of advanced and emerging economies

Note: DM = developed markets, EMU = Eurozone; EM = Emerging Markets.

While the emerging markets may be the global crisis’s future, its legacy continues to have severe consequences in the developed economies. This is especially true for eurozone peripheral countries, which are vulnerable due to the complexity of their crisis and the inadequacies of the mix and sequence of policy responses. To date, the US and the UK have done a good job of managing the trade-off between deleveraging policies and output costs. They did this by avoiding credit crunches while still achieving meaningful debt reductions in their private sectors and their financial systems.

This result, however, was achieved at the cost of a substantial re-leveraging of the public sector -- including their central banks. As a consequence, deleveraging the central banks will be a primary policy challenge for the foreseeable future.

Evolution of debt-carrying capacity

While debt levels are rising, the world is seeing a poisonous combination of growth and inflation rates that are lower than expected -- in part due to the global crisis. Deleveraging and slower nominal growth are in many cases interacting in a vicious loop, with the latter making the deleveraging process harder and the former exacerbating the economic slowdown.

Debt capacity in the years to come will depend on future dynamics of output growth, inflation and the real interest rates. Potential output growth in developed economies has been on a declining path since the 1980s.

• We argue that the crisis has caused a further, permanent decline in both the level and growth rate of developed economies’ output.
• The underlying output growth in emerging markets – most prominently China – has also been slowing since 2008.

As evidence of this, Figure 3 shows the slowdown in growth forecasts for both advanced and emerging economies, as captured by the progressive reduction in output projections in the different vintages of the IMF’s World Economic Outlook since 2008.

Figure 3:

The equilibrium real interest rate -- that is, the interest rate compatible with full employment -- is also poised to stay at historical low levels. Debt capacity will be under pressure if the actual real interest rate settles above its equilibrium level. This is likely to be the case in jurisdictions subject to the combined pressure of declining inflation and the zero lower bound constraint. Additional concerns come from possible increases in risk premia in those countries with a high level of legacy debt.

The danger of early rate rises

In such a context, and with still very high leverage, allowing the real rate to rise above its natural level would risk killing the recovery. Beyond pushing the economy into a prolonged period of stagnation, this would also put at risk the deleveraging process which is already very challenging.

Although there is a lot of uncertainty about such predictions, our call is for caution on interest rate rises. The case for caution in pre-emptively raising interest rates is reinforced by the weakness of inflationary pressures.

Moreover, the ECB should catch up with the other major central banks in an aggressive policy of quantitative easing.

• A forceful intervention with outright purchases of sovereign bonds – as well as private securities – is the correct tool for dealing with excessive downward pressure on inflation and fulfils the ECB mandate of price stability while helping the stabilization of the debt and easing credit conditions.

Further procrastination in implementing these by now urgent policy measures would risk, in the medium term, the resurgence of pressures on the sustainability of the Eurozone itself.

The broader challenges

The policy requirements for successful exit from a leverage trap are much broader than the appropriate conduct of monetary policy. The report addresses the fiscal challenges, the scope for macro-prudential policies and the restructuring of private-sector (bank, household, corporate) debt and sovereign debt.

The report also argues that – given the risks and costs associated with excessive leverage – more needs to be done to improve the resilience of macro-financial frameworks to debt shocks and to discourage excessive debt accumulation. Finally, we advocate enhanced international policy cooperation in addressing excessive global leverage.

This article was originally published on VOXEU. Republished with permission.

Hong Kong stocks have slipped 0.40 per cent at the start of trade, extending the previous day's heavy losses, as a pro-democracy protest that has shut down parts of the city moved into a third day.

The Hang Seng Index fell 91.95 points to 23,137.26 in the first few minutes on Tuesday.

Chinese stocks were 0.23 per cent higher in morning trade, the last trading day before a week-long holiday, on buying of resources shares, dealers said.

The benchmark Shanghai Composite Index edged up 5.53 points to 2,363.24.

The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 0.29 per cent, or 3.88 points, to 1,328.82.

Activity in China's manufacturing grew in September at the same pace as the previous month, according to HSBC. 

The British banking giant's final reading of China's purchasing managers' index (PMI), which tracks manufacturing activity in factories and workshops, was revised down slightly to 50.2 from a flash reading of 50.5 earlier this month.

The index is a closely watched gauge of the health of the Asian economic powerhouse. A reading above 50 indicates growth, while anything below signals contraction.

HSBC chief China economist Hongbin Qu said the September data suggests that manufacturing activity continues to expand at a slow pace.

“We think risks to growth are still on the downside and warrant more accommodative monetary as well as fiscal policies” he said.

Apple’s iPhone 6 is set to make its Chinese debut soon after receiving a licence from the country's Ministry of Industry and Information Technology.

The announcement, made on the Ministry’s website on Tuesday, means the iPhone 6 and iPhone 6 Plus can now be sold in mainland China.

The US tech giant has reported record sales of its latest line of iPhones since it was released in other markets on September 19. Apple is yet to give a release date for China.

The new product line represents the US firm's first foray into the big-screen market.

South Korean rival Samsung pushed forward the launch of its oversized Galaxy Note smartphone in South Korea and China last week in an attempt to head off competition from Apple.

For years, Beijing has feared colour revolutions. Now, it has one on Chinese soil. The Occupy Central movement has morphed into the Umbrella Revolution. Tens of thousands of Hong Kong citizens, including students as young as 13, have taken to the streets to protest against the Chinese central government’s electoral reform package.

Heroic protesters have braved pepper spray and tear gas, refusing to be intimidated. Civic groups and media have condemned the heavy-handed tactics employed by Hong Kong’s police force against student protestors. They have demanded the withdrawal of Beijing’s restricted form of universal suffrage.

Under the terms of Beijing’s offer, Hong Kong’s future chief executive must be vetted by a 1,200 person nomination committee, which is largely comprised of Beijing loyalists. The offer is simple and unambiguous; Beijing has made it clear it does not want anti-Communist democrats running Hong Kong.

Yes, it is anti-democratic but is it that unthinkable for an authoritarian government to reject a chief executive who is openly hostile to Beijing? Imagine the impact of a complete breakdown in the relationship between Beijing and Hong Kong’s government. This is something Beijing desperately wants to avoid.

The Communist leaders are still mystified as well as annoyed by the fact that Hong Kong citizens seemed quite happy to accept London-appointed British colonial governors without resistance. But a larger question looms: What prompted these students to take to the street in the first place?         

Melissa Chang, a former Al Jazeera Beijing correspondent, who was expelled from China, offers one of the most perceptive comments on the escalating confrontation in the former British crown colony: “Always sexy for headlines in the US/West to talk about people protesting for democracy, but it’s also about the economy,” she tweeted.

While we support and cheer Hong Kong citizens’ fight for democracy, it is also important to recognise Hong Kong residents’ frustration with Beijing. Its puppet government in Hong Kong goes much deeper than just electoral reform. Many grievances are related to wider economic and social ills that have little to do with democracy and elections.

Although Hong Kong is still one of the freest economies in the world, it has long ceased to be a land of opportunity for ordinary Hong Kong residents. It is a city dominated by billionaire plutocrats and Chinese red princelings.

The city has one of the highest per capita rates of billionaires in the world: 39 billionaires in a total population of 7 million, according to a Forbes rich list. At the same, around 1.3 million people, or 20 per cent of the population, were deemed to be living under the official poverty line in 2013.

Hong Kong’s Gini coefficient, a gauge of income inequality, increased from 0.525 a decade ago to 0.537 in 2011, according to official data. The measure is at its highest level since records began in 1971.      

Hong Kong’s middle class and university graduates are facing ever greater competition for the island’s limited educational, healthcare resources, and real estate from mainland migrants, investors and students. The Apple Daily recently ran a controversial full-page advertisement, paid for by public donations, featuring a giant locust [an imaginary representation of mainlanders] looming large over Hong Kong’s skyline.

The ad came about as a result of popular backlash against mainland mothers who come to Hong Kong to give birth so their children can be eligible for better resources. The ad and subsequent confrontations between Hong Kong nativists and mainland tourists have generated widespread anger among mainland tourists.

This is one of the major reasons the democracy movement in Hong Kong has generated such a mixed reaction in mainland China. Though the authorities have severely restricted the coverage of the protests in Hong Kong, a limited reaction on social media and other online forums suggest many people believe there is an element of anti-China sentiment in the movement.

Sara Zhong Hua, a sociology professor at the Chinese University of Hong Kong who comes from the mainland, told Al Jazerra that anti-Beijing and anti-mainland sentiment is often conflated in Hong Kong.

“Myself and many mainland scholars in Hong Kong, we do support a political movement, a movement for democracy,” she said. “But with the growth of anti-China sentiment, we feel discriminated against and frustrated. So there is less we can say to support them.” 

The reality of close economic integration with the mainland is that it brings more benefit to Hong Kong’s ruling establishment than to the island’s ordinary residents. Long-simmering social and economic tensions have now erupted, sparking a large scale protest against Beijing.

The source of Hong Kong’s political crisis is more than just about universal suffrage; it is about the island’s colonial style government that has served the island so well is breaking down. Let’s admit it, the Chinese and British have both relied on the same Hong Kong tycoons, such as Li Ka-Shing, the richest godfather in Asia, to rule the island.

To tackle Hong Kong’s political crisis, it will take more than a freely elected chief executive. It will require taking on Hong Kong’s powerful establishment that is allied with both Chinese Communists and foreign multi-nationals. 

The People’s Bank of China and the China Banking Regulatory Commission have eased mortgage lending restrictions for the first time since the global financial crisis in an effort to boost the ailing property sector, which is regarded as the weakest link in the country’s slowing economy.

There had been wild market speculation for weeks leading up to the bombshell announcement made last night, just before the week-long National Day holiday. People applying for a mortgage to buy a second home may now be eligible to pay less of a down payment and take advantage of lower interest rates. Some second-home buyers will be able to enjoy the same interest rates and down payment levels that were previously only available to first-home buyers, according to a statement posted on the central bank’s website.

Under China’s existing rules, first home buyers need to cough up at least a 30 per cent down payment, but, for people who want to buy a second home, a down payment of 60 per cent is required. Banks are barred from lending money to people who want to buy third or subsequent property.

Commercial lenders will also now be permitted to offer as much as a 30 per cent discount on the central bank’s benchmark lending rates to eligible home-buyers.

These draconian property restrictions were introduced more than four years when China’s property market was red hot and the central government was concerned about skyrocketing home prices. Many cities also imposed limits on home ownership in a bid to curb property speculation.  

The central bank also calls on banks to offer more support to Beijing’s affordable housing projects and even urges them to consider issuing mortgage-backed securities and long-term bonds to finance the borrowing needs of first-time home buyers.

Yesterday’s announcement, arguably the most aggressive measure to date, is aimed at rescuing China’s rapidly cooling housing market. The real estate sector accounts for about 16 per cent of China’s GDP, 33 per cent of fixed-asset investment, 20 per cent of outstanding loans, 26 per cent of new loans and 39 per cent of government revenues in 2013.

Home sales plunged 11 per cent during the first eight months of the year and prices also dropped in 68 of the 70 cities tracked by the central bank. The share prices of listed property developers have also taken a hit amidst growing fear of a potential crash in China’s property market.

However, Chinese analysts are divided about the potential impact of the central bank’s easing measure on the property market. The real estate research team from CITIC bank, one of the largest brokerage houses in China, is the most upbeat. Its analysts say the move is by far the strongest easing measure since the height of the global financial crisis in October 2008. They believe this measure will have an “extremely large” impact on the market.

“Home prices in first- and second-tier cities will rebound in October and the pace of dropping home prices will slow down and eventually end the cycle of decline. Key property developers will perform well,” says the CITIC research team. 

Though other analysts are generally positive about the central bank’s latest move to boost an ailing market, they are less sanguine about the potential impact on the housing market. 

Ren Zheping, chief macro-research analyst of Guotai Junan Securities Co, says the move is most forceful measure to date and it will have a positive impact on the real estate sector and the economy.  But he is less sure of how effective the measures will be and argues that banks might be reluctant to implement these measures given their more risk-averse culture of late.

Many argue that given the high cost of capital in China nowadays, it is very unlikely that commercial banks would actually implement the 30 per cent discount on benchmark rates for eligible home buyers.

It seems clear that the central bank is getting increasingly nervous about the state of housing market and is unveiling a string of new measures to boost the slowing property market.  However, it is still reluctant to make use of the most aggressive tools available, such as cutting benchmark rates and lowering reserve ratios.

Beijing is walking a tightrope between rescuing the all important housing market and keeping a lid on the country’s escalating debt problem.  Australian investors and policymakers need to keep a close eye on this sector, which will largely determine the health of our economy.   

Australia's national broadcaster the ABC has ignored Chinese government's demands not to screen a TV current affairs program that shines a spotlight on their Uighur population.

The program, which aired on the ABC's Foreign Correspondent on Tuesday night, features Beijing-based correspondent Stephen McDonell looking into the Chinese government's treatment of the minority Muslim community in the country's far west.

Footage from the show indicates McDonell was subjected to overt surveillance during his assignment.

ABC's director of communications Michael Millett confirmed officials from the Chinese Embassy requested a meeting in an attempt to have the program pulled.

"I made it clear that the ABC's obligation was to ensure the program was accurate and it would contain the views of all parties, including the Chinese authorities," he told AAP.

Mr Millett wouldn't confirm media reports Chinese officials advised the ABC that relations between the two countries could be damaged if the program was shown.

"I'm not going to go into detail on what they said, but they certainly made it clear that they weren't happy. You can read into that what you want," he said.

Mr Millett said it was the first time Chinese authorities had pressured the ABC not to run a program since they screened the movie The 10 Conditions of Love five years ago.

That movie also focused on the Uighur population, as it followed the personal and political struggle of female leader Rebiya Kadeer.

"The Chinese authorities have never been backwards in expressing their view about issues that they think affect them," Mr Millett said.

"But the ABC is an independent media organisation and it will do what it thinks is in the best interest of its audiences."

It's understood the Australian government has not been approached by Chinese authorities in regards to the Foreign Correspondent program.

Copper prices fell to a five-month low on Tuesday after a gauge of Chinese manufacturing activity showed the country's manufacturing sector expanding at a slower pace than previously thought, stoking worries about demand from the world's top consumer of the metal.

The most actively traded contract, for December delivery, slid 1.6 per cent to US$3.0075 a pound, the lowest close since April 15 on the Comex division of the New York Mercantile Exchange.

The HSBC China Manufacturing Purchasing Managers' Index in September was unchanged at 50.2 from August, below a preliminary reading indicating slightly higher growth that was released earlier this month. A reading above 50 indicates expansion, while a number below that threshold points to contraction. With China accounting for some 40 per cent of the world's copper demand, the weaker-than-expected data was seen as bad news for the industrial metal.

Also hurting prices for copper was a burgeoning dollar, which hit a two-year high against the euro on weak eurozone inflation data Tuesday. Strength in the greenback is bad news for base metals, which are priced in dollars and tend to be more expensive for investors who use other currencies to buy the metal.

"The mood here is pretty bearish," said Bob Haberkorn, a broker at RJO Futures. "It looks like people are expecting this market to trend down to its March lows, below US$3 a pound."

Unprecedented mass democracy rallies in Hong Kong have raised the specter of instability in China, also denting copper prices, Mr. Haberkorn said.

Copper prices have spent much of 2014 in retreat, falling 11 per cent amid worries that a slowdown in China's economy would sap the country's demand for copper. In two of the past three weeks, money managers held more bets that benefit from lower copper prices than wagers that profit if copper would rise, according to weekly data from the Commodity Futures Trading Commission.

Some market watchers said copper may be due for a rally. Prices for the industrial metal have gained an average of 3 per cent in October for the last five years, Standard Bank said in a note to investors. With China's traders out for a week-long national holiday that starts Wednesday, markets may be thinner and more volatile, exaggerating any boost that copper gets from investors looking to lock in profits on their bets against the metal, the bank said.

Copper settlements [ranges include electronic and pit trading]:

Oct $3.0055, down 4.75 cents; Range $3.0050-$3.0290

Dec $3.0075, down 4.90 cents; Range $3.0060-$3.0600

The continuing pro-democracy protests in Hong Kong are expected to cut the number of mainland tour groups heading to the city by nearly a third, which will take a toll on real-estate sales and retail outlets here.

For the second work day in a row, thousands of people flocked to rallies in three different districts of this former British colony, diverting traffic from key roads and prompting closures by banks, jewelers, and real-estate agencies.

The disruption took a toll on viewings of properties at real-estate agencies, property agents said. And the Hong Kong Monetary Authority said 33 branches of 19 banks were shut by late afternoon Tuesday.

Hong Kong real-estate companies and retailers normally look forward to China's Golden Week, which celebrates the establishment of the People's Republic of China. Mainland visitors to Hong Kong during the holiday week that begins Oct. 1 usually number in the millions. But with the potential decline in mainland Chinese visitors to the city due to the protests, some say they are worried. (Read The Wall Street Journal's live blog of the Hong Kong protests.)

"We haven't seen anything like this happen before," said Ricky Tse, chairman of the Hong Kong Inbound Tour Operators Association. He expects the protests will cause a 30 per cent drop in mainland tour groups heading to Hong Kong to about 200 a day for Golden Week.

"Hong Kong is famous for its metropolis lifestyle and is a shopping paradise for many tourists around the world," he said. "However, the continuing protests have damaged our image as a safe travel destination and could seriously affect our economy if things drag on."

The Hong Kong protests have been mainly focused on democracy and free elections. But another frequent gripe among Hongkongers, and especially young residents, is that property prices are too high and are inflated by money from mainland Chinese investors.

Shares of Sun Hung Kai Properties Ltd., the city's largest property developer, are down 5.4 per cent over the past two days. And Swire Pacific Ltd., one of the city's oldest conglomerates and owner of the Pacific Place shopping mall in Admiralty, has seen its shares fall 3.6 per cent over the same period. Admiralty is a focal point of the protests because of its proximity to the Hong Kong government's headquarters. The city's benchmark Hang Seng Index fell 1.3 per cent after falling 1.9 per cent on Monday.

Louis Chan, chief executive of the residential division at Centaline Property Agency Ltd., one of Hong Kong's biggest real-estate companies, said he expects the protests to put potential buyers off viewing new properties. He said the number of property viewings on Hong Kong island fell 50 per cent over the past weekend, when protesters blocked the streets.

"I think the overall property sales will drop by 30 per cent this week compared with early September if the street protest continues," Mr. Chan said.

Centaline said it suspended service at its Central branch for the past two days due to the protests, while rival Midland Holdings Ltd. said it relocated operational staff from its Central headquarters, as well as from Mong Kok and Admiralty, to other branches in the city. Centaline and Midland account for more than 50 per cent of Hong Kong's real-estate transactions.

Sammy Po, chief executive of Midland Realty's residential department, said number of property viewings in its Wan Chai and Causeway Bay branches fell 50 per cent in the past two days, compared with a week earlier.

"The primary sales sentiment is likely to be hit by the Occupy Central event as investors take a wait-and-see attitude," Mr. Po said.

Retailers specializing in jewelry and cosmetics, which are both heavily taxed in mainland China, were hit by declines in Hong Kong trade. Shares of jewelry chain Luk Fook Holdings International Ltd. closed up 3.9 per cent on Tuesday after declining 4.8 per cent Monday, while Chow Tai Fook Jewellry Group Ltd. rose 1.7 per cent, after falling 3.8 per cent on Monday. For a second day, Chow Tai Fook closed a branch near the Sogo department store in Causeway Bay, which is a prime Hong Kong shopping area.

Sa Sa International Holdings Ltd., the city's largest cosmetic retailer, rose 0.2 per cent Tuesday after falling 3.1 per cent Monday.

Many of these stocks had already fallen in recent months as China's economic slowdown and anticorruption campaign cut overall mainland spending in Hong Kong.

"The retail stocks are in a short-term technical rebound after they dropped sharply in recent weeks," said Ben Kwong, associate director of brokerage KGI Asia, adding that the peaceful tone of the overall pro-democracy campaign has alleviated some investor worries.

SINGAPORE—Chinese sovereign-wealth fund China Investment Corp. sold a portion of its stake in Noble Group Ltd., prompting a 6.8 per cent slide in shares of the Singapore-listed commodity trader.

CIC raised 396 million Singapore dollars (US$310.6 million) by selling close to a third of its existing stake in Noble Group, people with knowledge of the deal said Tuesday. Media reports of the stake sale by one of the largest shareholders in the commodity firm triggered a fall of as much as 9% in Noble Group shares, causing the Singapore market regulator to seek an explanation from the company. In a statement late Tuesday to the Singapore Exchange, Noble Group confirmed that CIC had sold a portion of its stake and will now hold 9.4% of Noble compared with 13.8% previously.

The Chinese sovereign-wealth fund spent US$850 million, or S$2.1137 per share, in 2009 on a stake in Hong Kong-based Noble Group, which has assets ranging from Brazilian sugar mills to Australian iron ore and oilseed-processing facilities in China and India. CIC, the world's fifth-largest government-controlled fund, with $600 billion under management, has in recent months been shifting its focus from the energy and commodities sector to build its holdings in the U.S. and some European countries.

Founded in 2007, CIC invests part of China's foreign-exchange reserves abroad. In the years after its founding, it emphasized investments in natural resources and the developing world. It regarded bets on commodities as a way to profit from China's surging growth, because that is a major driver of demand for energy, minerals and food. But China's slowing economic growth has taken some of the appeal away from commodities investments.

Noble Group said in its statement that the stake sale by CIC "is part of CIC's overall portfolio rebalancing exercise." People familiar with CIC's thinking said earlier that they believe the U.S. Federal Reserve's recent decision to taper its easy-money policies will lead to capital to flow back to the developed world.

UBS said in a note, "We believe a quick turnaround in agriculture is unlikely, with headwinds at Noble likely to persist in its various divisions."

People close to the deal said CIC sold nearly 300 million shares at S$1.32 each, which is a 5.4% discount to Monday's closing price of S$1.395 a share. The price is at the lower end of the S$1.32-S$1.35 price range indicated earlier by one of the people with knowledge of the deal. Noble shares closed Tuesday at S$1.30 each.

"This [CIC sale] is probably not the best news in the world," said Oversea-Chinese Banking Corp. analyst Carey Wong, who covers Noble Group. Mr. Wong noted that the indicated price range was at a discount to the previous close, which could have driven the stock's sharp drop Tuesday morning.

J.P. Morgan was the sole adviser on the deal.

China’s home prices fell at a faster pace last month than the previous month, a survey showed on Monday, as the central bank announced looser credit policies to try to avoid a sharp decline.

The average price of a new home in 100 major cities was 10,627 yuan (US$1,730) per square meter last month, down 0.92 percent from August, the China Index Academy said in a statement.

It was the fifth month-on-month fall in a row, as analysts warn that China’s flagging property sector is contributing to slowing growth in the world’s second-largest economy.

All of China’s 10 biggest cities continued to post month-on-month decreases, with the average price in Beijing dropping 1.34 percent to 32,281 yuan per square meter.

“The market trend is clearly downward” said the academy, the research unit of real estate Web site operator Soufun.

“Potential buyers expect the market to decline, and there is not enough credit to support demand,” it said.

In recent years China has sought to rein in runaway property prices — a source of discontent among ordinary citizens — by introducing market control measures, including buying limits on second and third homes.

However, local governments make much of their income from land sales to developers and have tried to find ways to ease the restrictions as property prices have fallen in recent months.

The survey results came as China’s central bank eased credit policies for the sector, announcing yesterday that people who had paid off previous mortgages would be treated as first-time buyers and enjoy preferential policies.

For first-time buyers, lenders are now allowed to charge a mortgage rate as low as 70 percent of the benchmark lending rate, the People’s Bank of China said in a statement.

“These measures suggest that the government does not want to have a sharp correction in the property sector,” analysts at Nomura said in a note.

“But we doubt that they will end the correction, given the severity of the oversupply problem,” they added.

In June, the city of Hohhot, Inner Mongolia, became the first to drop restrictions on the purchase of second homes, and most other municipalities that had imposed the policy have followed suit.

The central government in July published a draft of long-awaited property registration rules, a move that could reduce scope for speculation and pave the way for nationwide real-estate taxes.

Year-on-year, prices in the surveyed cities rose 1.12 percent last month, 2 percentage points lower than the annual rise in August and the ninth month of shrinking yearly increases, the academy said.