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Index down but confidence returning

SHANGHAI'S key stock index closed lower yesterday as measures to bolster China's major industrial sectors fell short of expectations.

The Shanghai Composite Index dipped 0.45 percent, or 8.66 points, to 1,920.21 points.

Gainers outnumbered losers 540 to 298 and 70 remained unchanged. Turnover swelled to 83.2 billion yuan (US$12.18 billion), up from 64.2 billion yuan the previous day.

"The local benchmark index fell following the tumbles in surrounding markets, but the fact that gainers outpaced losers reflected an upbeat sentiment in the short term. The soaring volume of transactions signaled the recovery of investor confidence," said Wang Xingjun, an analyst with Donghai Securities Co.

The government will cut the sales tax on passenger cars with engines of 1.6 liters and smaller to 5 percent between January 20 and December 31 in a bid to expand sales. SAIC Motor Co, China's largest car maker eased 1.64 percent to 5.98 yuan. FAW Car Co slid 2.09 percent to 8.45 yuan.

The country's two largest oil refiners were also on the losing side after China cut fuel prices for the second time in a month in line with declines in global oil prices. PetroChina Co shed 1.07 percent to 10.13 yuan while China Petroleum and Chemical Corp edged down 0.97 percent to 7.17 yuan.

Bucking the downward trend, China Unicom led the telecommunications sectors up on expectations the 3G operations will increase profitability in the long run. China United Telecommunications Corp surged 3 percent to 4.8 yuan. ZTE Corp, China's second-biggest maker of phone-network equipment, advanced 2.55 percent to 27.36 yuan.


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