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Shanghai market plunges at midday break

SHANGHAI'S key stock index plunged more than 2 percent in the morning session, heading for its fourth weekly decline, as
the market facing mounting pressure from a capital shortage on more initial public offerings of heavyweights and large-
scale financing of listed companies.

The benchmark Shanghai Composite Index tumbled 2.45 percent, or 72.12 points, to close at 2,874.27 points. Turnover stood
at 73.52 billion yuan (US$10.81 billion). Losers outnumbered gainers 746 to 116 and 9 remained unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic market, lost 2.33 percent to close at 981.76 points.

A subsidiary of China Metallurgical Group Corp announced it received regulatory approval to raise as much as 16.8 billion
yuan in its IPO on the Shanghai bourse. China Vanke Co, the nation's largest publicly-listed real estate developer said
it plans to raise up to 11.2 billion yuan through private placement.

Analysts said a string of these financing plans in the second half could dilute market capitals and dragged down stock

Bank of China dropped 1.76 percent to 3.90 yuan. Lending in the second half will be "much smaller," with new credit in
July and August dropping from the monthly averages of the first half, President Li Lihui told reporters yesterday. The
bank posted an unexpected profit gain of 22.6 billion yuan ($3.3 billion) in the second quarter.

China Cosco slid 3.76 percent to 13.82 yuan. The company reported a 4.59 billion yuan first-half net loss, compared with
a restated 15.1 billion yuan profit a year earlier.


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