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Uncertainty rules as key index drops almost 4%

SHANGHAI'S key stock index fell nearly 4 percent yesterday. There was uncertainty in the market despite the announcement of a stimulus plan for the metals industry.

The benchmark Shanghai Composite Index dropped 3.87 percent, or 85.32 points, to close at 2,121.25.

Among the 877 listed companies in the local bourse, most shares fell with only 34 rising and two remaining unchanged. Turnover shrank to 127.4 billion yuan (US$18.74 billion), compared with 131.7 billion yuan on the previous trading day.

"There is technical demand for a correction after Wednesday's unreasonable rebound," said Wan Bing, an analyst from GF Securities Co.

Lenders were down on speculation new loans in February will fall sharply from last month's figure. China Merchants Bank Co, the nation's most profitable bank, plunged 4.36 percent to 14.27 yuan. The Bank of China fell 1.86 percent to 3.17 yuan and China Construction Bank dipped 2.4 percent to 4.06 yuan.

"Investors should be cautious about the future trend as there is not much room left to boost the economy after the stimulus packages targeting 10 sectors," Changjiang Securities Co wrote in a research note. "There are still many uncertainties after the National People's Congress, despite expectations of more forceful measures."

Metal producers also fell despite the government saying it would take steps to boost domestic demand for nonferrous metals and "strictly control" capacity expansion under an industry stimulus plan.

Jiangxi Copper Co, China's biggest producer of the metal, fell 5.7 percent to 17.2 yuan. Aluminum Corp of China Ltd fell 3.18 percent to 10.06 yuan.

Property developers remained weak as the industry failed to be included in any government incentives to prop up the country's key sectors. Shanghai Lujiazui Finance & Trade Zone Development Co plummeted 8.98 percent to 18.95 yuan. Shanghai-based Shimao Property Co dived 8.66 percent to 8.12 yuan, while Gemdale Corp, a Chinese partner of ING Group NV, shrank 6.11 percent to 7.84 yuan.


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