China stocks sink to 21-month low

(Xinhua)
Updated: 2008-09-08 20:24

BEIJING - Chinese shares extended their losses on Monday as the benchmark index slumped to a 21-month low, dragged down by the country's oil giants and concerns of slower economic growth.

The two bourses started the day with active trading on Monday morning, buoyed by gains in regional markets and boosted by Sunday's news that the US government would take over troubled mortgage giants Fannie Mae and Freddie Mac to stabilize the financial market.

Shares were also boosted by the China's securities regulator's decision to allow shareholders of listed companies to issue exchangeable bonds to ease share oversupply after the lock-up periods.

But heavy selling of shares of the country's two oil giants soon ignored the impact of the government measures and caused the benchmark index to plummet.

PetroChina shed 4.86 percent to 11.36 yuan (US$1.62), the lowest on record. Sinopec, the country's biggest crude refiner, tumbled 7.59 percent to 9.13 yuan.

Financial shares settled with a tempered pace of increase as China Construction Bank edged up 1.42 percent to 5 yuan, and Bank of China jumped 1.15 percent to 3.52 yuan.

Investors shrugged off the government's plans to boost the market soon, indicating how weak the market was, said an analyst with the Shanghai-based Xinlande Securities.

Market declines would continue in the short time against the backdrop of slower economic growth in China, according to Shenyin Wanguo Securities.

China will release its August inflation data on Wednesday. Consumer Price Index (CPI) growth is forecast to ease to about 5 percent from a year earlier after a slew of government measures to cope with a 12-year high of CPI in February.

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