Banks led losses in Chinese shares on Monday as investors' fears of a further credit squeeze were stoked by a top economic planning official, who vowed to pursue more modest economic expansion.
Ma Kai, head of the State Development and Reform Commission, told the National People's Congress, or parliament, over the weekend that the government was targeting growth of about seven percent in 2004, well off the 9.1 percent pace set in 2003.
The benchmark Shanghai composite index, grouping hard-currency B shares and yuan-denominated A shares, closed 1.5 percent lower at 1,637.144 points.
"Bank stocks were hit by expectations of credit-tightening," said Zheng Weigang, a senior analyst at Shanghai Securities.
"Sentiment had also been affected by signs of a slowdown in growth, coupled with the looming problem of inflation," he added.
Huaxia Bank, which in January became the first listed lender to issue subordinated bonds, fell by 3.9 percent to 7.38 yuan.
The largest of the listed lenders, China Merchants Bank Co Ltd, ended at 10.66 yuan, down 2.9 percent.
Still, analysts said the market just needed to take a breather and had potential to climb over the medium term.
"This reining-in of the economy is inevitably going to squeeze stocks. But we're not looking at a long-term slowdown, just some consolidation," Zheng said.
Shenzhen Textile was the southern bourse's top decliner, ending at 13.40 yuan, down 9.2 percent.
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