China shares dive on profit-taking, policy jitters

posted: 12 HOURS 57 MINUTES AGO

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SHANGHAI -Chinese shares slumped Thursday on profit-taking and government policy uncertainty ahead of an annual economic planning meeting.

The benchmark Shanghai Composite Index tanked 119.19 points, or 3.6 percent, to close at 3,170.98, the biggest one-day fall since August 31. The Shenzhen Composite Index for China's smaller second exchange declined by 3.5 percent to 1,171.72

A rally the previous session fizzled amid uncertainty about policy as the planning meeting approached, said Zhang Qi, an analyst for Haitong Securities in Shanghai. Chinese shares had surged by 9.8 percent since the start of November.

"The market needed a breather because it attracted too much capital in previous sessions," Zhang said.

Chinese news reports have said the policy meeting will take place from the end of November, a month earlier than usual.

Banks led the decline. Industrial & Commercial Bank of China Ltd., China's biggest commercial lender, lost 3 percent to 5.17 yuan. Bank of China Ltd. dropped 3.5 percent to 4.13 yuan, while China Construction Bank Ltd. shed 3.4 percent to 5.92 yuan.

Steelmakers retreated after surging in the previous two sessions. Baoshan Iron & Steel Co., China's biggest steel producer, plunged by 6.6 percent to 8.34 yuan. Inner Mongolia Baotou Steel Union Co. plummeted by 5.9 percent to 4.95 yuan.

Nonferrous metals rose on higher copper prices. Jiangxi Copper Ltd., the country's biggest metal producer, gained 2.4 percent to 44.94 yuan, while Yunnan Chihong Zinc&Germanium Co. advanced 4.5 percent to 32.82 yuan.

In currency markets, the yuan strengthened to 6.8266 to the U.S. dollar, from Wednesday's close of 6.8280.

2009-11-26 03:53:20