Global markets shivered yesterday over fears that China's economy is overheating. The Independent. Financial Times

The world's fourth largest economy expanded at 11.1% in the first three months of this year, an acceleration from 10.4% growth in the previous quarter, confounding analysts who had expected it to slow slightly this year.

The National Bureau of Statistics in Beijing reported that, at 3.3%, inflation exceeded 3% for the first time in more than two years. Analysts predicted China's central bank would raise interest rates again, and force banks to keep more money in their reserves rather than lending it out.

In London, the FTSE 100 tumbled more than 60 points before recovering to close 8.8 points lower at 6,440.6. In New York, the Dow, which hit record highs on Wednesday, added 4.8 points to 12,808.6.

The prospect of higher borrowing costs and concerns about boom and bust pummelled Far East stock markets. China's main share index, the Shanghai Composite, dived 4.5%, the biggest one-day drop since the global sell-off at the end of February. However, it remains 29% higher than at the start of the year. Hong Kong shares fell 2.3%, while the Singapore stock market fell 3.2%.

China has grown by more than 10% for the past four years in succession, leading economists to predict, at various points, 'hard' or 'soft landings' for the economy.