Shanghai shares close at 7-month low

09:32, May 05, 2010      

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China's key stock index fell 1.2 percent Tuesday to its lowest close in seven months, led by bank and property shares after China's central bank raised banks' reserve requirement ratios to fend off inflation.

The benchmark Shanghai Composite Index ended the day at 2,835.3 points, after closing flat Friday.

The market was closed Monday for a national holiday.

Banks weighed on the index after the central bank's Sunday announcement of a 0.5 percentage point hike in the ratio of funds that banks must keep with the central bank as reserves. It is the third such increase this year in a campaign to absorb excess cash in the economy.

Minsheng Bank was the most actively traded share, down 1.7 percent, while Industrial &Commercial Bank of China, the country's biggest lender and the third-most active share, fell 1.1 percent.

"All sectors are under pressure from the reserve requirement ratio announcement, which is the major news for the market," said Zheng Weigang, an analyst at Shanghai Securities.

Property companies dragged down the broader index, with the property index falling 4.7 percent to its lowest in more than 13 months.

Losing Shanghai stocks outnumbered gainers by 552 to 347, while turnover fell to a one-and-a-half month low of 78 billion yuan ($11.43 billion) from Friday's 106 billion yuan ($15.52 billion).

Source: Global Times
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