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Credit control fears depress the market

SHANGHAI'S key stock index extended losses yesterday on concerns the government will tighten lending.

The benchmark Shanghai Composite Index was down 0.28 percent, or 8.68 points, to close at 3,080.77. Turnover shrank to 155.3 billion yuan (US$22.84 billion) from 181.1 billion yuan.

Shares opened lower following tumbles in United States markets and hit an intraday low of 3,011.21.

Rallies in property and coal sectors narrowed the losses in the afternoon.

"There is growing speculation that the government will slightly adjust the monetary policy to curb credit growth. Besides, the pace of initial public offering is accelerating. As a result, wider market fluctuations are expected," Nanjing Securities Co said.

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

The Industrial and Commercial Bank of China, the nation's biggest lender, slid 2.76 percent to 5.28 yuan.

China Construction Bank retreated 2.82 percent to close at 6.20 yuan.


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