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Market drops as investors take profits

SHANGHAI'S key stock index fell today amid profit taking after the index climbed above 2,100 points in the wake of three consecutive days of gains.

The Shanghai Composite Index dipped 0.46 percent, or 9.73 points, to 2098.02 points.

Losers outnumbered winners 635 to 234 while 13 stocks remained unchanged. Turnover continued to swell, climbing to 124.5 billion yuan (US$18.3 billion) from yesterday's 110.7 billion yuan.

The Shenzhen Composite Index, which tracks the smaller domestic market, fell 1.28 percent, or 8.33 points, to 644.65 points.

The local benchmark index had risen almost 2 percent by the end of morning trading after China's cabinet approved measures to shore up the textile and machinery industries. But shares plunged in the afternoon in the midst of broad selling to take profits.

The State Council increased the export tax rebate for textiles to 15 percent from 14 percent and pledged to help companies facing difficulties get credit. For the machinery industry, the government said it will set up a special fund to encourage technological innovation.

"PMI, a measure of conditions in the manufacturing industry, rose for the second straight month in January, signaling a recovery and boosting market sentiment," Golden Sun Securities Co wrote in a research note, "but there might be fluctuations around 2,100 points where the index would meet technical pressures."

But in the afternoon machinery and textile manufacturers fell as the government efforts fell short of investor expectations. Changsha Zoomlion Heavy Industry, China's second-largest manufacturer of machinery for handling concrete, dropped 1.14 percent to 15.57 yuan.

Youngor Group Co, China's largest maker of men's clothing by sales, tumbled 3.64 percent to 8.73 yuan. Ningbo Shanshan Co lost 1.56 percent to 8.83 yuan.

The heavily weighted insurers and steel makers bucked the downward trend.

Baoshan Iron & Steel Co, the country's largest steelmaker, rose 1.07 percent to 5.66 yuan while Angang Steel Co, the second biggest, gained 0.36 percent to 8.46 yuan after increases in steel prices. Wuhan Iron & Steel Co increased 0.78 percent to 6.49 yuan.

Ping An Insurance (Group) Co, the nation's second-largest insurer, climbed 4.61 percent to 32.46 yuan. It plans to build what will probably be China's tallest building in Shenzhen, the Wall Street Journal reported.

China Life Insurance Co Ltd, the country's largest insurer, rose 2.27 percent to 21.63 yuan.

Elsewhere, China Eastern Airlines Corp, the nation's third-largest carrier by fleet size, increased 4.02 percent to 5.17 yuan after Chairman Liu Shaoyong said the company has been seeking an additional capital injection from the Chinese government.


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