In his blog here, world authority on encryption Bruce Schneier, said that a three-person Chinese research team, mostly from Shandong University in China, had been circulating a paper about having broken the algorithm.
This attack builds on previous attacks on SHA-0 and SHA-1, and is a major, major cryptanalytic result.
He said that the attack pretty much put a bullet into SHA -1 as a hash function for digital signatures, even though it is beyond the scope of most criminals to exploit. µ
* THE ORIGINAL note in PDF form is here.