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Index notches biggest loss this year

SHANGHAI'S key stock index buckled nearly 7 percent on the last trading day of the month among speculation that curbs on new loans and more company floats in the future will curb liquidity in the market.

The benchmark Shanghai Composite Index tumbled 6.74 percent, or 192.94 points, to close at 2,667.74 points. Turnover was 124.7 billion yuan (US$18.3 billion). Losers outnumbered gainers 742 to 27 and 40 remained unchanged.

This was the biggest single-day loss since June 2008. The index lost 7.73 percent on June 10, 2008. The index posted a 21.81 monthly loss, second to the drop in October when the index tumbled 25 percent.

The Shenzhen Composite Index, which tracks the smaller domestic market, slid 7.14 percent to close at 904.70 points.

A total of 380 stocks dropped the daily limit of 10 percent in Shanghai and Shenzhen bourses.

New loans extended by domestic banks in August may drop below 300 billion yuan, a drop from the 356 billion yuan increase in July, and this may hurt investors' confidence, Ping An Securities wrote in a research note. Caijing Magazine reported on its Website today that new loans may only total 200 billion yuan.

China Metallurgical Group Corp will float no more than 3.5 billion A share to raise around 16.8 billion yuan.

Industrial & Commercial Bank of China, the nation's biggest lender, dropped 3.46 percent to 4.47 yuan. Shanghai Pudong Development Bank slid 6.11 percent to 17.84 yuan. China Construction Bank lowered 5.51 percent to close at 5.14 yuan. Bank of Communications lowered 4.12 percent to 7.92 yuan.

Metal producers were also weak. Zijin Mining Co retreated 7.09 percent to 8.25 yuan. Shandong Gold Mining Co lost 4.29 percent to 47.96 yuan. Jiangxi Copper Co slid the daily limit of 10 percent to 33.27 yuan.


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