Equities hit by lack of optimism

SHANGHAI - Stocks on the Chinese mainland fell, extending the longest weekly slide in three years. The retreat came on a jump in money market rates and after media reports that the government will cut railway construction spending and maintain property curbs next year.

CSR Corp and China Railway Construction Corp led declines for rail-related companies after the Xinhua News Agency said the railways ministry will reduce spending by 15 percent in 2012. China Minsheng Banking Corp slid 1.8 percent, pacing a slump for lenders, after the money market rate surged to a five-week high. Inner Mongolian Baotou Steel Union Co surged the most in six months after China Investment Securities Co said shares of steelmakers are the cheapest in three years.

"The economy is still slowing and liquidity is tight at the year-end," said Zhang Ling, general manager at Shanghai River Fund Management Co. "Both factors are contributing to the weakness in the market these days. If the slowdown worsens, the government may introduce more aggressive measures to support the economy, such as tax cuts."