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City market drops 2.17% in morning

SHANGHAI'S key stock index tumbled more than 2 percent in the morning session on concerns government will tighten lending after explosive loans in the first half added to economic risks.

The benchmark Shanghai Composite Index was down 2.17 percent, or 67.17 points, to close at 3,022.28 points. Turnover stood at 86.16 billion yuan (US$12.67 billion). Losers outnumbered gainers 650 to 193 and 23 remained unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic market, dipped 0.87 percent to close at 999.38 points.

Aggressive credit expansion poses a risk to the nation's lenders and a concentration of loans to some industries may damage the financial system, said Wang Huaqing, disciplinary secretary of the China Banking Regulatory Commission.

Property developers and lenders were the hardest hit on concerns over tightened credit.

Industrial & Commercial Bank of China, the nation's biggest lender, slid 4.42 percent to 5.19 yuan. Shanghai Pudong Development Bank withdrew 2.97 percent to 23.82 yuan. China Construction Bank retreated 4.39 percent to close at 6.1 yuan. Bank of China lost 3.04 percent to 4.47 yuan. China Merchants Bank Co sank 3.86 percent to 17.92 yuan. Bank of Communications Co lowered 3.85 percent to 9.48 yuan.

Shanghai Lujiazui Finance & Trade Zone was off 0.31 percent to 25.44 yuan. Poly Real Estate Group Co eased 0.7 percent to 28.50 yuan. Gemdale Corp plunged 3.33 percent to 17.15 yuan.

PetroChina Co, the nation's biggest oil producer and the biggest component index, dropped 2.56 percent to 14.44 yuan after crude slid to a six-week low. Crude oil fell as much as 1.4 percent to US$62.05 a barrel on the New York Mercantile Exchange, the lowest since May 26. Sinopec, Asia's largest oil refiner, slumped 3.81 percent to 11.35 yuan.

SAIC Motor Corp rose for a sixth day on media reports June passenger car sales rose 58 percent from a year earlier. SAIC increased 0.81 percent to 17.33 yuan.


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