Shares drop on renewed fears of rate hike

SHANGHAI - Stocks on the Chinese mainland fell for the first time in seven days on speculation that some local governments may default on their bank loans and the central bank will continue raising interest rates.

China Minsheng Banking Corp led declines for lenders, sliding more than 4 percent, after the Hong Kong Economic Journal reported a financing vehicle of the Shanghai government may not be able to repay loans. Anhui Conch Cement Co retreated from a two-month high. Sinovel Wind Group Co retreated among wind power companies after Citic Securities Co cut its recommendation for the industry.

"The central bank will probably raise interest rates next month," said Zhang Qi, an analyst at Citic Securities in Shanghai, China's biggest brokerage. "As long as inflationary pressure is there, that'll hold back a rebound for stocks."