SHANGHAI stocks fell yesterday as the European debt crisis took a turn for the worse with Spain's 10-year bond yield jumping to a euro-era record.

The Shanghai Composite Index shed 0.66 percent to 2,300.8 points.

"The prolonged European debt crisis will impose more downside risk to the global economy," China International Capital Co wrote in a report. "China has strengthened policy stimuli. The 'economic bottom' is foreseeable in the short run, but the slowdown looks set to stay over the long term."

Although the Greek election result on Sunday was welcomed by investors, the ease in tension didn't last long. Spain's surging borrowing costs indicated the nation may need a sovereign bailout after the government on June 9 called for 100 billion euros (US$126 billion) for the nation's banks.

Cargo shippers fell on the deteriorating economic situation in Europe, China's biggest trade partner. Weaker demand from Europe will crimp the revenue of shippers. China COSCO Holdings Co, the world's biggest operator of dry-bulk ships, shed 0.8 percent to 4.81 yuan. Its unit COSCO Shipping Co lost 0.9 percent to 4.3 yuan.