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Airline shares plunge takes market down at midday

SHANGHAI'S key stock index continued to fall today and dropped nearly 2 percent in morning trade to below 2,100 points as airline companies plunged.

The benchmark Shanghai Composite Index lost 1.92 percent, or 40.66 points, to close at 2.080.60 points as of 11:30am. Turnover was 57.4 billion yuan (US$8.39 billion). Losers outnumbered gainers 820 to 51 and 37 remained unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic market, slid 4.92 percent to close at 655.95 points.

China Eastern Airlines Corp, the nation's third-largest carrier by fleet size, said it will cancel some orders for Airbus SAS and Boeing Co aircraft and pay the
planemakers compensation as it slashes growth plans. The stock plunged the daily limit of 10 percent. China Southern Airlines Co Ltd also buckled 10 percent to close at 4.40 yuan. Air China, the nation?s biggest carrier by market value, slid 7.84 percent to 4.47 yuan.

Maanshan Iron & Steel Co, China's fourth-largest listed steelmaker said 2008 profit probably fell 71 percent because of higher raw material and fuel costs and the value of inventories dropped. The shares lowered 4.79 percent to 3.58 yuan.

Banks reversed yesterday's losses. Industrial & Commercial Bank of China, the nation's biggest lender, added 1.09 percent to 3.71 yuan. Shanghai Pudong Development advanced 2.27 percent to 17.60 yuan. China Construction Bank edged up 0.49 percent to 4.08 yuan.

The energy sector was also among the gainers. PetroChina, the biggest index component, edged up 0.09 percent to 10.80 yuan. China Petroleum & Chemical Corp, Asia's largest refiner, was up 0.98 percent to 8.27 yuan.

Huaneng Power International Inc, added 1.63 percent to 8.10 yuan. Huadian Power International Co Ltd, advanced 2.24 percent to 5.02 yuan.


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