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Market suffers slight correction

SHANGHAI'S market closed slightly lower today among flat trading after new bank loans in October dropped to only half that of September, suggesting a tightened credit policy.

The benchmark Shanghai Composite Index dipped 0.11 percent, or 3.42 points, to close at 3,175.19 points. Turnover shrank to 144.5 billion yuan (US$21.2 billion) from 163 billion yuan the previous day. Losers outnumbered gainers 564 to 283, and 65 remained unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic market, edged up 0.07 percent to close at 1,135.50 points.

China's consumer price index, the main gauge for inflation, was down 0.5 percent year on year in October, the National Bureau of Statistics said this morning. The Producer Price Index, the factory gate inflation measure, dropped 5.8 percent from a year ago.

Banking shares were among the losers after new loans in October dropped 51 percent to 253 billion yuan from 516.7 billion yuan in September. China Merchants Bank Co, the nation's fifth-largest bank by market value, dropped 2.09 percent to 18.29 yuan. Shanghai Pudong Development Bank lowered 0.98 percent to 23.26 yuan. China Construction Bank was down 0.66 percent to close at 5.98 yuan.

"The correction is an adjustment to earlier gains and the index is likely to keep an upward trend with an improving economic situation," according to Zhao Yang, an analyst at United Securities.

Property developers showed mixed results although the National Development and Reform Commission said housing prices in 70 major cities jumped the most in more than a year in October. Property prices gained for a fifth month since June after it started to rebound with record lending and government stimulus measures. However investors were afraid that tightened monetary supply and a halt of stimulus measures at the end of the year might curb property demand.

Shanghai Lujiazui Finance & Trade Zone Development Co was down 1.18 percent to 28.51 yuan. Shanghai Shimao Co Ltd jumped 4.24 percent to 18.21 yuan. China Vanke Co, the biggest listed domestic real estate developer, lost 1.32 percent to 11.98 yuan. Gemdale Corporation dropped 1.41 percent to 16.10 yuan.

Beiqi Foton Motor said it will extend their cooperation with Daimler AG by building plants outside China to make heavy-duty trucks. Its shares edged up 0.15 percent to 20.29 yuan.

Dongfeng Automobile Co said vehicle sales in the first 10 months this year rose 14.3 percent to 167,962 units. The stock lost 1.7 percent to 6.35 yuan.

Metal producers were also weak. Yunnan Copper Co was down 2.02 percent to 31.11 yuan. Zijin Mining Co dipped 0.31 percent to 9.72 yuan. Jiangxi Copper decreased 1.40 percent to 40.22 yuan.


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