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Profit concerns send shares lower at midday

SHANGHAI'S key stock index dipped at the morning close amid growing concerns profits will be eroded as the economy weakens.

The Shanghai Composite Index lost 0.2 percent, or 3.98 points, to 2000.97 points at 11:30am.

The Shenzhen Composite Index, which tracks the smaller domestic market, was up 0.11 percent, or 0.69 points, to 613.85 points.

Earnings of domestic-listed companies will probably shrink 14 percent this year, compared with an earlier estimate of 0.5 percent growth, UBS AG said.

Guangzhou Iron & Steel Co said it incurred a loss in 2008 because prices fell and the value of raw-material inventories dropped. Rival Gansu Jiu Steel Group also said profit plunged more than 50 percent last year. Baosteel, China's biggest mill, has said it is facing its "most difficult" period since its founding 30 years ago.

Guangzhou Steel fell 1.78 percent to 3.86 yuan while Gansu Jiu Steel dropped 1.23 percent to finish the session at 5.61 yuan.

Bucking the downward trend, ZTE Corp, China's second-biggest telephone network equipment maker, surged 4.5 percent to 29.70 yuan on expectations it will win more orders to build the country's high-speed wireless network.

China will invest 170 billion yuan (US$24.9 billion) on new third-generation mobile phone networks next year, the Ministry of Industry and Information Technology said in a statement yesterday. Total investment in 3G networks over three years will be 400 billion yuan and provide service to 50 million users, the statement said.


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