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Market slips as commodity firms overshadow lenders

SHANGHAI'S key stock index ended slightly lower today after swinging between gains and losses, as sluggish commodity producers overshadowed rises by lenders.

The benchmark Shanghai Composite Index lost 0.59 percent to 2,894.48 points, after reaching a high of 2,932.08 points. Turnover rose to 99.9 billion yuan (US$14.7 billion) from last Friday's 93.2 billion yuan. Gainers outnumbered losers 436 to 396, with 39 stocks unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic market, was up 0.14 percent to close at 998.75 points.

Sinopec, Asia's largest oil refiner, retreated 1.6 percent. Its locked-up shares worth 673 billion yuan became tradable today.

Baoshan Iron & Steel Co, the country's largest steelmaker, eased 1.3 percent to 6.65 yuan after it cut steel price for November by as much as 13 percent. Handan Iron & Steel Co slid 2 percent to 4.79 yuan.

Other commodity producers were also on the losing side on fears of overcapacity. Aluminum Corp of China Ltd, the nation's biggest maker of the lightweight metal, slumped 3.9 percent to 13.50 yuan and Jiangxi Copper Co lowered 2 percent to 36.83 yuan.

Lenders had mixed performance after the country's wealth fund promised to raise stakes in the biggest banks.

State-owned Central Huijin Investment Co, an arm of China's sovereign wealth fund, has bought about 263 million yuan A shares in the country's three biggest listed state-owned banks, the lenders said over the weekend in separate documents to the stock exchange.

Huijin said it will continue to buy shares in the open market over the next 12 months, the filings said.

Analysts believed the investment unit aimed to bolster the share price of banks, which have been undervalued in this round of correction.

"The securities regulator's estimation that new loans last month may fell between 300 billion to 400 billion yuan has missed market expectation and raised concerns over bank earnings. Huijin's investment could stabilize market sentiment," said Li Shanshan, a China Merchant Securities Co analyst.

Industrial & Commercial Bank of China, the nation's biggest listed lender, added 0.4 percent to 4.96 yuan. The bank will unlock its 236 billion non-tradable shares held by the finance ministry and Huijin by October 20. Analysts said Huijin's move may blow off the market worry that the two shareholders will reduce holdings and dragged the market down. Bank of China dipped 0.3 percent to 3.99 yuan.


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