Chinese shares closed down 3.05 percent on Tuesday, a day after scaling nearly two-year highs, as investors sold shares in metals companies due to falling global prices for copper and aluminium.
The benchmark Shanghai composite index closed at 1,613.251 points, a day after it hit its highest closing level since April 2004. Chinese copper and aluminium futures dropped their 4 percent trading limit on Tuesday, after speculators and funds cashed in on the London Metal Exchange in the previous session.
LME copper hit record highs last week, of about double its level at the beginning of 2006. Major copper producer Jiangxi Copper Co Ltd sropped its 10 percent daily limit to 15.43 yuan on Tuesday. Baoshan Iron and Steel Co Ltd, the listed arm of China's largest steelmaker, slid 1.32 percent to 4.5 yuan after its counterpart, ThyssenKrupp AG, agreed with Brazil's Cia. Vale do Rio Doce, the world's largest iron ore exporter, on a 19-percent price increase. Chinese mills have yet to settle term prices for the year beginning April 1, 2006.
Bucking the trend, Yangtze Hydroelectric Power Co Ltd rose 4.63 percent to 7.69 yuan a share. The company announced on Tuesday it had received the green light from China's stock market regulator to issue warrants.
The benchmark index is still up by nearly 40 percent since the start of the year, buoyed mainly by Beijing's market-friendly steps, including encouraging greater participation by mutual funds.