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Stocks fall on prospect of cooling

By Chua Kong Ho (China Daily)
Updated: 2010-03-24 10:25
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SHANGHAI: China's stocks fell, dragging the benchmark index from a three-week high, as investors speculated recent gains were excessive given the prospect of increased government measures to cool economic growth.

Poly Real Estate Group Coand Gemdale Corp lost more than 1 percent after the Oriental Morning Post said Shanghai may demand quicker land payments from developers.

Air China Ltd fell 1.4 percent after UBS AG said its shares were overvalued. Shandong Huatai Paper Co paced declines by paper manufacturers on easing speculation that the government will allow the yuan to appreciate. A higher yuan would cut imported material costs.

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The Shanghai Composite Index dropped 21.45, or 0.7 percent, to close at 3,053.13, trimming a rebound from this year's Feb 2 low to 4 percent. The gauge swung between gains and losses at least five times on Tuesday. The CSI 300 Index retreated 0.8 percent to 3,275.57.

"The market is still seeking direction as policy uncertainties remain," said Larry Wan, the Shanghai-based deputy chief investment officer at KBC-Goldstate Fund Management Co, which oversees about $583 million. "The market is vulnerable to short-term tightening risks, especially for sectors like property."

Government steps to restrain inflation and cool economic growth have made the Shanghai Composite the fifth-worst performer globally among 93 benchmark indexes this year after an 80 percent rally in 2009.

In Hong Kong, the Hang Seng Index increased 0.3 percent, with Bank of China Ltd rising 1.8 percent before an earnings announcement. China Telecom Corp jumped 5.1 percent on brokerage upgrades.

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