Chinese shares end lower 5.79 percent

Chinese shares closed down 5.79 percent on Monday, extending last week's decline amid continued worries over the state of the domestic economy and corporate earnings, dealers said. The Shanghai Composite Index, which covers A and B shares, was down 176.34 points to end at a two-month low of 2,870.63 on turnover of 137.5 billion yuan (20.1 billion dollars).
Monday's fall marked the biggest daily percentage drop since November 18, when the index fell 6.31 percent to 1,902.43. "The large gains in the first half (created) a bubble in the market, so when the government showed signs of tightening bank credit there (was) a selloff," Great Wall Securities analyst Zhang Yong told Dow Jones Newswires.
The Shanghai Composite index jumped 87.4 percent from January to the end of July, boosted by rapid pace of lending and hopes of China's economic recovery. However, figures published last week showed July's new yuan lending fell to 355.9 billion yuan from 1.53 trillion yuan in June, raising investor worries over tightening credits and triggered a round of heavy selling. The key index shed 6.6 percent over the past week.
Resources firms were among the worst hit sectors amid worries over weak corporate earnings and a pullback in commodity prices on overseas markets late last week. Yunnan Copper fell by the ten percent daily limit to 29.84 yuan after the company reported a 126.3 million yuan net loss in the first half year. Jiangxi Copper and Aluminium of China both plunged by the ten percent trading limit to close at 37.37 yuan and 15.03 yuan respectively.
Heavyweight blue chips fell across the board. PetroChina fell 6.10 percent to 13.09 yuan. Industrial and Commercial Bank of China lost 2.90 percent to 4.69 yuan. The Shanghai A-share index fell 184.97 points, or 5.78 percent, to close at 3,013.14 on turnover of 136.9 billion yuan. The Shenzhen A-share index dropped 70.65 points, or 6.57 percent, to 1,003.98 on turnover of 67.7 billion yuan. The Shanghai B-share index lost 13.59 points, or 6.71 percent, to 189.12, while the Shenzhen B-share index shed 28.23 points, or 5.50 percent, to 485.28.