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Overcapacity worry drives market lower in morning

SHANGHAI'S key stock index ended lower in the morning session today, led by steel producers on concerns of overcapacity.

The benchmark Shanghai Composite Index lost 1.05 percent, or 33.33 points, to close at 3,137.65 points. Turnover stood at 90.5 billion yuan (US$13.3 billion) at midday break. Losers outnumbered gainers 576 to 282 and 21 stocks remained unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic market, dropped 1.15 percent to close at 1,158.3 points.

Steel producers led the decliners after European Union Chamber of Commerce in China said yesterday overcapacity in China's steal sector amounted 100 million to 200 million tons at the end of 2008 and the number for 2009 is still climbing. Baoshan Iron & Steel Co and Wuhan Iron retreated 3.5 percent to 8.05 yuan. Xinjiang Ba Yi Iron & Steel Co decreased 2.4 percent to 13.65 yuan. Wuhan Iron and Steel withdrew 2.8 percent to 8.08 yuan.

Zijin Mining Group Co, the country's largest gold producer, tumbled 5 percent to 10.29 yuan after saying billionaire Chen Fashu sold 146 million of the company's shares, reducing his stake to 11.946 percent from 12.95 percent. Zhongjin Gold Corp, the second biggest by market value, was off 3.3 percent to 60.41 yuan.

Bucking the downward trend, environmental-friendly related shares were strong after China pledged yesterday to cut carbon emission by up to 45 percent per unit of GDP by 2020 compared with 2005 levels.

Zhejiang Feida Environmental Science & Technology Co jumped by 10 percent daily cap to 16.12 yuan and Tianjin Capital Environmental Protection Group Co surged 8.2 percent to 7.39 yuan.


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