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Domestic stocks plummet on easing inflation figures

By Yu Xi (Global Times)

09:03, July 10, 2012

The Shanghai and Shenzhen stock markets opened the week with huge losses Monday as concerns about the country's economic slowdown intensified after the government's official consumer price index (CPI) for June cooled to 2.2 percent, down from a reading of 3 percent in May.

The Shanghai Composite Index lost 52.77 points, or 2.37 percent, to close at 2,170.81; while the Shenzhen Component Index slumped 193.48 points, or 2 percent, to finish at 9,496.68.

Both markets opened lower Monday due to contractions in the US and European markets Friday. The Shanghai Composite Index declined steadily throughout morning trading, dropping below the 2,200 point mark shortly before the afternoon bell. The index continued its downward trajectory through the remainder of the day due to weak market sentiment and eventually finished at its lowest level since January 10, 2012.

The brewing, medicine, tourism and electric power sectors were strong performers Monday; while cement, coal, home appliance, securities, foreign trade and environmental protection stocks dropped the most.

The National Bureau of Statistics released the country's June CPI, a main gauge of inflation, Monday. The 2.2 percent growth in inflation recorded last month, the slowest pace since February 2010, gives the government more space to loosen monetary policies, especially as worries about the faltering domestic economy bleed over into the stock market, say analysts.

Premier Wen Jiabao said during a trip to the eastern province of Jiangsu over the weekend that China's current economic situation is generally stable, but it still faces relatively great downward pressure, and China should maintain its proactive fiscal policy, according to the Xinhua News Agency.

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