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Market slumps 3.35% in morning

SHANGHAI'S key stock index declined for the first time in four days and ended below 2,900 points in the morning trade among speculation excess cash will not continue to support the stock market in the second half of the year.

The benchmark Shanghai Composite Index buckled 3.35 percent, or 100.39 points, to close at 2,893.03 points. Turnover was 84.4 billion yuan (US$12.4 billion). Losers outnumbered gainers 700 to 168 and 42 remained unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic market, lost 3.06 percent to close at 968.32 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 in the beginning of this year.

Industrial & Commercial Bank of China, the nation's biggest lender, dropped 2.89 percent to 4.70 yuan. Shanghai Pudong Development Bank slid 6.18 percent to 20.96 yuan. China Construction Bank was down 2.77 percent to close at 5.62 yuan. Bank of Communications buckled 5.07 percent to 8.62 yuan.

Metal producers were also among the losers. Aluminum Corp of China Ltd, the nation's biggest maker of the lightweight metal and also called Chalco, posted a third quarterly loss as the global recession drove down prices. The loss 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 5.01 percent to 14.80 yuan.

Jiangxi Copper Co said first-half profit declined 61 percent from a year ago to 1.2 billion yuan as price for the metal dropped. The stock lowered 5.15 percent to 37.40 yuan.

Property developers were also weak among concerns tighter credit will pull down home sales. China Vanke Co, the biggest listed domestic real estate developer, lost 4.15 percent to 10.86 yuan. Gemdale Corporation sank 5.56 percent to 14.09 yuan. Poly Real Estate Group dropped 3.29 percent to 24.40 yuan. China Merchants Property Development Co Ltd buckled 5.12 percent to 27.23 yuan.


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