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Market drops for first time in 4 days

SHANGHAI'S key stock index declined for the first time in four days and ended lower today among speculation excess cash will not continue to support the stock market in the second half of the year.

The benchmark Shanghai Composite Index dropped 2.59 percent, or 77.63 points, to close at 2,915.8 points. Turnover rose to 160.9 billion yuan (US$23.66 billion) from 138.4 billion yuan on Monday. Losers outnumbered gainers 636 to 233 and four remained unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic market, lost 2.33 percent to close at 975.53 points.

"China's banking system still has excessive liquidity and there are still bubbles in the capital market," Guo Shuqing, chairman of China Construction Bank, told reporters in Beijing yesterday.

Chinese banks handed out a record of US$1.1 trillion of new loans in the first half to support the nation's economic stimulus package. Analysts and research institutions suggested some of the capital flowed into the country's stock market, driving the gauge 59 percent above from its level from the start of the year.

Industrial & Commercial Bank of China, the nation's biggest lender, dropped 2.89 percent to 4.70 yuan. Shanghai Pudong Development Bank slid 6.98 percent to 20.78 yuan. China Construction Bank was down 4.33 percent to close at 5.53 yuan. Bank of Communications buckled 6.17 percent to 8.52 yuan.

Metal producers were also among the losers. Aluminum Corp of China Ltd, also known as Chalco, posted a third quarterly loss as the global recession drove down prices. The nation's biggest aluminum maker lost was 1.6 billion yuan for the three months ended June 30, compared with a profit of 1.1 billion yuan in the same period last year. Its shares lost 2.89 percent to 15.13 yuan.

Jiangxi Copper Co said first-half profit declined 61 percent from a year ago to 1.2 billion yuan as prices for the metal dropped. The stock lowered 5.66 percent to 37.2 yuan.

Property developers were also weak among concerns tighter credit will cut down home sales.

China Vanke Co, the biggest listed domestic real estate developer, lost 5.65 percent to 10.69 yuan. Gemdale Corporation sank 6.77 percent to 13.91 yuan. Poly Real Estate Group dropped 4.28 percent to 24.15 yuan. China Merchants Property Development Co Ltd buckled 6.97 percent to 26.7 yuan.


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