SHANGHAIBEIJING Aug 9 Reuters Chinese treasuries fell on Friday after state media said trading accounts must not be borrowed or transferred, following the launch of a probe by regulators into suspected misbehaviour in the country39;s redhot bond market.

Borrowed or transferred interbank bond trading accounts could lead to a rise in noncompliant transactions, distort market prices and increase credit risks, a central bankaffiliated newspaper said on Friday.

Chinese regulators this week started investigating small financial institutions over their trading behaviours as the People39;s Bank of China PBOC stepped up efforts to cool a sizzling rally in the treasury bond market.

China39;s 30year treasury futures fell as much as 0.7 in early trading on Friday and 10year bond futures dipped 0.3 at one point. Both instruments are headed for a weekly decline, snapping a fourweek winning streak.

Treasury yields, which move inversely to prices, rose across the board on Friday.

The National Association of Financial Market Institutional Investors NAFMII, an industry body supervised by the PBOC, said late on Wednesday that it would investigate four rural commercial banks over suspected bond market manipulation.

NAFMII said on Thursday it found misbehaviour in bond trading by some small financial institutions involving borrowed accounts and had reported some serious rulebreakers to the central bank for punishment.

Borrowing, or allowing the use of trading accounts by nonowners in…