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Profit taking triggers biggest drop in 8 months

SHANGHAI'S key stock index lost 5 percent today, the biggest daily drop in eight months, after the debut of China State Construction Engineering Corp triggered the profit taking.

The benchmark Shanghai Composite Index ended 171.94 points lower to close at 3,266.43 points after plunging nearly 8 percent to touch a low of 3,174.21 points during trading.

The plunge came after a five-day winning streak which added a gain of 7 percent. The index has gained 79 percent this year as a result of government stimulus incentives, record bank loans and optimism of an economic recovery.

The Shenzhen Composite Index, which tracks the smaller domestic market, retreated 5.83 percent to close at 1,072.11 points.

China State Construction Engineering Co Ltd, the biggest initial public offering in the country in two years, started trading in the Shanghai bourse today.

Its shares opened at 6.70 yuan, or 60.29 percent above its offer price, but closed at 6.53 yuan. The country's largest housing contractor is raising 50 billion yuan from the IPO.

Commodity producers led the losses on concerns that previous gains have outpaced prospects for earnings growth. Baoshan Iron and Steel Co, China's biggest steel maker, was down 3.83 percent to 9.04 yuan and Xinjiang Bayi Iron & Steel Co Ltd slid 8.12 percent to 13.23 yuan.

Turnover swelled to 296.9 billion yuan (US$43.66 billion) from 243.6 billion yuan on Tuesday. Losers outnumbered gainers 827 to 50 and one remained unchanged.


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