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The Independent Online
Shares in HSBC Holdings, Britain's largest bank, which earns most of its profits in Asia, fell 10 per cent last week, hurt by the slumping Hong Kong stock market. The Hang Seng index dropped 8 per cent to its lowest level in three years while borrowing costs shot up to five-month highs as the weakening yen slowed company profit growth.

"If the yen can't stabilise, rates will remain very high. That squeezes the banks and no one will be willing to lend money," said Henry Tse, analyst at Indocam Asia. The falling yen is crimping Japanese demand for Chinese goods and could force the Chinese to devalue the yuan.

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