UpdateChina slashes interest rates, banks' reserve ratio for the sixth time in a year in bid to stem slowdown after lacklustre third-quarter growth

China cut interest rates and the banks' reserve ratio on Friday - just four days after it released lacklustre third-quarter economic figures - in an apparent effort to stem a further slide in corporate performances and potentially massive job losses.

The central bank announced in the evening that the benchmark one-year lending rate would be lowered by 0.25 percentage points to 4.35 per cent from today, while the rate for one-year deposits would go down by 0.25 percentage points to 1.5 per cent.

Cutting banks' reserve requirement ratio by 0.5 percentage points would release 800 billion yuan (HK$974 billion) of funds into the market with banks keeping less money in reserves, said China Merchant Securities chief economist Xie Yaxuan.

The cuts came after China reported 6.9 per cent growth in gross domestic product in the three months ending on September 30. Though slightly better than economists' forecast of 6.8 per cent, it was still the slowest pace of growth in 61/2 years.

"The reductions resulted from a worsening performance in the manufacturing sector and stronger-than-expected deflationary pressure," Industrial Bank chief economist Lu Zhengwei said, adding that the loosened monetary policies would not be enough to underpin the troubled economy.

Friday's interest rate cut was Beijing's sixth since November - further evidence of the leadership's determination to maintain moderate growth to stem a slowdown that may lead to social disunity amid severe unemployment, company bankruptcies and financial turbulence.