After an impressive rally off the Summer lows, China's Shanghai Composite index has recently risen to within 3.5% of its 2009 highs. However, after last night's decline, the index has dug itself into a bit of a deeper hole. Last night, China's benchmark index declined over 3% for its worst day since August 31st. The decline was in reaction to growing concerns that the nation's largest banks will be forced to raise capital due to the unprecedented amount of loans they have extended in 2009. With China down over 3%, the baltic dry index down for the third straight day, and Russia cutting interest rates to record low levels, the early tone for emerging markets is looking a little shaky.
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