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Commodity declines weigh heavily on market at midday

SHANGHAI'S key stock index dropped over 1 percent, led by metal producers, as a decline in commodity prices renewed concerns that the global recession will dent earnings.

The benchmark Shanghai Composite Index fell 1.24 percent, or 31.82 points, to close at 2,525.64 points.

The Shenzhen Composite Index, which tracks the smaller domestic market, was down 1.3 percent to close at 853.51 points.

Yunnan Copper Industry Co, China's third-biggest producer of the metal, retreated 4.16 percent to 20.03 yuan (US$2.93) after it said it expects a loss in the first quarter on reduced output and as copper prices slid the most in two months.

Western Mining Co eased 5.26 percent to 14.78 yuan after saying first-quarter profit plunged 84 percent because of lower metal prices.

Tongling Nonferrous Metals Group Co, the second-largest copper producer, tumbled 6 percent to 14.56 yuan. Jiangxi Copper People Co, the biggest, lost 4.33 percent to 24.3 yuan.

Copper dropped 4.2 percent to US$2.105 a pound in New York yesterday, the biggest decline since February 17. Copper futures slumped by the exchange-imposed 5 percent daily limit in Shanghai, tracking the overnight decline in London.

PetroChina Co, the nation's biggest oil company, was off 0.92 percent to 11.82 yuan as crude oil tumbled the most since March.

Crude oil fell 8.8 percent to US$45.88 a barrel in trading yesterday, the lowest settlement since March 11. It was the biggest decline since March 2.

Bucking the downward trend, gold producers gained as investors sought bullion as a safe haven asset amid an equity decline.

Zijin Mining Group Co, the largest gold producer, gained 0.78 percent to 10.37 yuan after saying first-quarter profit jumped 21 percent on higher bullion prices. Rival Zhongjin Gold Co increased 1.79 percent to 57 yuan.

Gold rose the most in a month yesterday in New York as a slide in European and US equities boosted demand for precious metals.


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