China will cut interest rates for the third time in six weeks amid signs of another co-ordinated global attempt by central banks to restore confidence to financial markets.

The People’s Bank of China will reduce the lending rate by 0.27 percentage points to 6.66 per cent, while the one-year deposit rate will drop to 3.60 per cent from 3.87 per cent.

America's Federal Reserve is widely expected to cut rates to 1 per cent later today while speculation is growing that the Bank of Japan is gearing up to cut rates on Friday.

Zhao Qingming, senior economist at China Construction Bank in Beijing, said: "I think this is also part of a co-ordinated move of global central banks to bail out the financial markets. Though other central banks have not announced rate cuts yet, we can see that they are on the way.”

However, the timing of the cut, earlier than expected, also indicated growing concern about the economic outlook, according to Ben Simpfendorfer, an economist at Royal Bank of Scotland in Hong Kong.

Chinese exports are slowing as overseas demand wilts, while the property sector, which accounts for a quarter of fixed-asset investment, is in full retreat, hitting the construction and metals industries hard.

“We can’t rule out another rate cut before the end of the year,” Mr Simpfendorfer said.

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