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Chinese stocks hit by Greenspan comments

Chinese stocks fell by 1.5 per cent yesterday before rallying after former US Federal Reserve chairman Alan Greenspan expressed doubts about a potential "bubble" developing in the country.The Asian giant has seen dramatic increases in capital invested in its firms in the past 12 months, which in 2007 has already seen total market value grow by 50 per cent.Now analysts are beginning to voice concern about the market's potential for a crash if speculation gets out of hand.Mr Greenspan predicted the Chinese market was heading for a "dramatic contraction" and said the current rate of growth was "clearly unsustainable".The 81-year-old, who was replaced at the Federal Reserve last year by Ben Bernanke, has held a reputation as difficult to understand but his latest remarks have proved easy to interpret by investors.The Shanghai Composite Index slipped 0.5 per cent yesterday after rallying from earlier slips of up to 1.5 per cent.European markets have also fallen this morning. The German Dax index fell 0.63 per cent on early morning trading while the French Cac 40 lost 1.11 per cent of its value.The FTSE 100 index was down by 0.62 per cent after the first hour of trading.

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