Lower petrol prices have failed to boost investor confidence, and declining inflation is now being viewed by some market watchers as a sign that the global economy may go into another recessionary spiral again.

After months of negative growth, credit expanded by 0.17 percent in June, but the pace was far below the Government's target of credit growth this year, totalling 12-13 percent. Enterprises continued to be hampered by high credit costs, high inventories, and electricity and water rate hikes.

"I have contacted many enterprises and see very few bright spots by year's ends," said Ngo Long Giang, asset management manager at MB Capital. "Most companies are just trying to survive now, let alone expand their business"

On the HCM Stock Exchange on July 3 the VN-Index shed another 1.48 percent of its value to close at 413.09 points. The value of trades improved 10 percent over July 2, reaching 678.7 billion VND (32.3 million USD), but decliners overwhelmed advancers by a five-to-one margin.

The VN30 Index, tracking the southern market's top shares, declined by 1.16 percent to 486.95. Gainers among blue chips included HCM City Infrastructure Investment Co (CII), up 2.6 percent, and seafood processor Hung Vuong Co (HVG), up 1.3 percent.

Refrigeration Electrical Engineering (REE) was the most-active share, with over 2 million changing hands, but it closed unchanged at 15,800 VNDper share.

On the Hanoi Stock Exchange, the HNX-Index fell by 1.26 percent to 69.21 points. Trading was sluggish on a volume of 38 million shares, worth 340.7 billion VND (16.2 million USD).

Losers outnumbered gainers by 192-47.

VNDirect Securities Co (VND), with 4.36 million shares traded, was the most-active code in Hanoi , but it lost over 1 percent to end the session at 9,600 VND.

Foreign investors became net buyers on both exchanges on July 3 , picking up shares worth a combined 21.4 billion VND (1 million USD).-VNA