August 25, 2015 / 1:35 PM / 4 years ago

UPDATE 1-ECB's Constancio plays down China crash, says too early for ECB to act

* ECB vice president: China’s stock market relatively small

* Constancio says too early to understand what’s happening (Adds detail, background)

By Francesco Canepa and John O’Donnell

MANNHEIM (Germany), Aug 25 (Reuters) - The European Central Bank’s vice president sought to play down a crash in China’s stock market, saying the ripple effects may be limited and it was too early for the ECB to react.

Vitor Constancio made the remarks on Tuesday after China’s central bank cut interest rates, ratcheting up support for a stuttering economy and a plunging stock market that has sent shockwaves around the globe.

Pointing to the size of the China’s stock market, which he said was not so big, as well as to a recovery from “knee-jerk” reactions on other markets, Constancio said it was too soon to judge the situation.

“It’s too early to fully understand what has happened, which is now being corrected in many markets,” he told journalists on the sidelines of a conference.

“Indications are that ... the (Chinese) economy is not decelerating so much to justify the rout in the stock market,” he said.

Constancio also pointed to German business morale rising in August. “The problems in China are not affecting ... the concerns of German firms,” he said, adding: “The stock market was too buoyant ... in spite of all, it’s still about what it was last year.”

Chinese stocks tumbled again on Tuesday, as investors despaired at the lack of action from Beijing in response to a slowdown in the world’s second-largest economy. The People’s Bank of China said it was cutting the one-year benchmark bank lending rate. (Writing by John O’Donnell; Editing by Ruth Pitchford)

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