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Stocks dive as manufacturing contracts

By Wang Jiamei (Global Times)

08:32, May 25, 2012

Both the Shanghai and Shenzhen stock markets ended lower yesterday due to renewed concerns over the slowing domestic economy following the release of the preliminary HSBC China Manufacturing Purchasing Managers Index.

The benchmark Shanghai Composite Index slid 0.53 percent, or 12.46 points, to close at 2,350.97, and the Shenzhen Component Index fell 1.56 percent, or 158.62 points, to finish at 9,984.58.

Market sentiment was dampened by the fact that China's economy hasn't recovered yet as the preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of manufacturing activity, fell to 48.7 in May, down from the final reading of 49.3 in April.

Although the Shanghai Composite was propped up by the railway, machinery, cement and infrastructure construction sectors in the early morning, the market soon reversed after being dragged down by losses in brewing and securities stocks. Despite some help from the nonferrous metal and software sectors, the index still ended down for the day. The Shenzhen Component dropped below the important 10,000-point mark again.

Profit-taking sell-offs weighed heavily on the brewing sector yesterday. Luzhou Lao Jiao Co dropped 6.58 percent to 40.62 yuan ($6.40); Gansu Mogao Industrial Development Co fell 6.29 percent to 12.67 yuan; and Sichuan Swellfun Co decreased 5.65 percent to 26.38 yuan.

The two indices together saw 649 stocks gain in value, 1,683 lose and 145 draw even.

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