For the second time this week, China's central bank refused to provide liquidity for the financial system by suspending repurchase business in its regular market operation. Thursday's inaction may indicate the People's Bank of China "and some other regulators could be taking the opportunity of the tight funding conditions to 'punish' some small banks which had previously taken advantage of the stable interbank rates to finance their purchase of higher-yield bonds," BofA Merrill Lynch commented in a report Thursday.

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