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The cost of short-term borrowing in China’s interbank market edged down on Friday from a multi-year high as domestic stocks and commodities prices continued to suffer from tightening liquidity amid a regulatory crackdown on financial risk.

The Shanghai interbank overnight rate, or Shibor, eased to2.8348 per cent on Friday. That was down from the highest level in more than two years hit on Thursday – but only by about 0.02 percentage points.

Comments last week from President Xi Jinping have been interpreted by investors in China as a signal of tighter monetary policy and the People’s Bank of China has declined to roll over medium-term loans recently, sapping liquidity from the market.

That has been to the detriment of both equities and commodities prices. The Shanghai Composite index was down 0.8 per cent on Friday, while the Shenzhen Composite had shed 0.6 per cent.

On the Dalian Commodity Exchange iron ore futures also touched their downward limit of 8 per cent for the second straight day on Friday, while even gold had dipped as much as 1.4 per cent on the Shanghai Futures Exchange.

Copyright The Financial Times Limited 2017. All rights reserved.

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