Over concerns and speculations that the country's central bank might be hiking borrowing costs for the first time in two long years, China's stocks fell to hit the lowest level in a week, and interest-rate swaps, on the other hand, rose.

In the afternoon trading, the benchmark Shanghai Composite Index fell into losses on the back of evidence that People's Bank of China might lift rates as early as this week, mainly because last year, new bank loans managed to hit a record high.

The gauge at the stock market declined 95.02, or 2.9%, 3,151.85 points, which has been the lowest reading since January 13. So far into the year, the index has lost 3.8% of its value, which has made China the worst performer among the 10 biggest stock markets across the world.

"There is speculation in the market that the central bank may raise the benchmark interest rate by 27 basis points this Friday. It's possible for the central bank to do that for the purpose of snuffing out inflation", said Wei Wei, an analyst at Shanghai's West China Securities Co.

The first step towards changes was taken by the country's central bank on January 12, when it curbed lending by hiking the proportion of deposits major banks must stash away as reserves, and now, the facility is expected to take some more similar measures.