Bourse closes down, off 7-month high

09:36, November 10, 2010      

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The nation's key stock index, the Shanghai Composite Index, closed 0.8 percent lower Tuesday, retreating from its near 7-month high, with investors wary higher inflation may spark further monetary tightening, prompting a sell-off in heavyweights such as Sinopec Corp that have gained in the recent rally.

The Shanghai Composite Index finished at 3,135.0, after closing up 1 percent Monday.

The index has soared 18 percent in the past six weeks, boosted by the prospect of hot money flows into China.

Traders said investors switching from real estate and bonds into stocks, coupled with new QFII licences, meant the stock market was flush with cash.

China's central bank surprised markets Tuesday by auctioning one-year bills in its open market operations at a higher yield than last week, with traders saying the move may indicate Beijing will tighten monetary policy sooner than expected to ward off excess liquidity.

The Shenzhen Component Index slid 0.67 percent, or 93.01 points, to end at 13,714.3.

Source: Global Times


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