SHANGHAI - Stocks on the Chinese mainland fell for a fourth day as investors speculated Europe's debt crisis will worsen and lending to small companies may drop as banks hoard cash to meet year-end reserve-ratio requirements.

China Cosco Holdings Co, the nation's largest shipping Line, dropped to a record low as Europe's lenders sought to borrow more cash from the European Central Bank (ECB) than economists had expected, increasing concern the crisis won't be contained. Citic Securities Co paced declines for brokerages on the prospect slumping trading volumes will curb profit growth. Focus Technology Co and Anhui Gujing Distillery Co led a gauge of small-company stocks lower as money market rates jumped.

"There's no confidence in the market and the worry is focused on the economic slowdown and a poor export outlook," said Wu Kan, a fund manager at Dazhong Insurance Co, which oversees $285 million. "Investors are worried the government doesn't have many tools to bolster growth as debt levels are now higher than a couple of years ago."

The Shanghai Composite Index dropped 4.85 points, or 0.2 percent, to 2186.30 at the close, the lowest in a week. The index trades at an estimated price-earnings ratio of 10.5 times, a record low, according to weekly data compiled by Bloomberg that began tracking the multiple in 2006.

The CSI 300 added 0.1 percent to 2341.33 as coal producers rose and material companies, the worst performing group this year, pared losses. The CSI Smallcap 500 Index fell 1.3 percent to 3298, the lowest level since September 2009. The Bloomberg China-US 55 Index, the measure of the most-traded US-listed Chinese companies, slid 1.5 percent at the close in New York.

The Shanghai Composite has fallen 6.3 percent in December, adding to a 22 percent slump this year, after the central bank raised interest rates three times to cool inflation and exports to Europe slowed because of the region's debt crisis.

Trading volume of stocks in the index is 27 percent less than the 180-day average, according to data compiled by Bloomberg. Citic Securities, which announced on Wednesday that it completed the sale of 51 percent stake in China Asset Management Co, fell 1.4 percent to 9.83 yuan ($1.55). Haitong Securities Co slid 2.4 percent to 7.34 yuan.

In Europe, a total of 523 eurozone banks took a record 489 billion euros ($639 billion) from the ECB in three-year loans on Wednesday, exceeding the median estimate of 293 billion euros among economists surveyed by Bloomberg. Europe accounts for about 18 percent of China's exports, according to Shenyin & Wanguo Securities Co.

China Cosco dropped 1.6 percent to 4.99 yuan, the lowest since the stock started trading in June 2007. Cosco Shipping slumped 1.6 percent to 4.20 yuan.

A gauge of material producers in the CSI 300 slipped 0.2 percent, the most among 10 industry groups. The measure has plunged 38 percent this year on concern an economic slowdown will curb demand for metals. Shandong Gold Mining Co slid 1.7 percent to 28.89 yuan.

Taiyuan Heavy Industry Co paced declines for industrial stocks, falling 1.8 percent to 5.02 yuan. Jing Ulrich, chairman of global markets for China at JPMorgan Chase & Co, said on Monday that she is bearish on "cyclical" stocks such as heavy industries.

The seven-day repurchase rate, a gauge of funding availability in the financial system, rose 17 basis points, or 0.17 percentage point, to 3.77 percent on Thursday in Shanghai, according to a weighted average compiled by the National Interbank Funding Center.

"It's the year-end effect," Ju Wang, a Singapore-based senior strategist at Barclays Capital, said on Wednesday. "Demand for cash will increase as people prepare for the Chinese holidays and this will tighten liquidity."

The CSI smallcap gauge has tumbled 33 percent this year. The ChiNext measure of start-up companies slipped 0.5 percent on Thursday, adding to a 33 percent slide in 2011. Anhui Gujing, which makes spirits and wine, fell 1.5 percent to 83.80 yuan.

Bloomberg News