China's stock market fell sharply and turnover shrank on Wednesday as trade resumed after week-long Lunar New Year holidays, during which overseas markets were hit hard by the threat of a US recession.
The Shanghai Composite Index ended the day 2.37 percent lower at 4,490.721 points, dragged down by banks, steel firms and other large-cap stocks such as PetroChina, which slumped 3.20 percent to a record closing low of 23.92 yuan.
Losing stocks in Shanghai outnumbered gainers by 589 to 303, while turnover in Shanghai A shares shrank to a two-month low of 61.3 billion yuan ($8.5 billion) from the previous trading day's 93.01 billion yuan.
China's market did not come close to matching losses suffered by foreign markets during the mainland Chinese holidays. The Hang Seng Index in Hong Kong, where many shares of Chinese firms are listed, fell 7.6 percent during that period.
Traders said some investors appeared to be betting the market, now 27 percent below October's all-time high, had little room to fall further. The index bounced sharply from a six-month intra-day low of 4,195 points just before the holidays. That bounce appeared to confirm technical support at 4,165, the 38.2 percent retracement of the market's bull run from June 2005.
Industrial & Commercial Bank of China, the biggest bank, dropped 2.54 percent to 6.91 yuan on Wednesday. Steel companies, whose profits are vulnerable to slower economic growth and rising materials costs, also fell sharply. Baoshan Iron & Steel, the biggest listed steel maker, sank 3.91 percent to 16.69 yuan.