China's key stock index ended 0.55 percent lower yesterday as blue chips weakened in late trade, although many Sichuan-area shares remained strong on expectations of demand from reconstruction efforts after a devastating earthquake.

Analysts and local media also noted talk that the government was encouraging market participants to help preserve market stability in the aftermath of Monday's quake.

The benchmark Shanghai Composite Index had traded higher for most of the session before slipping late in the day to end at 3637.324 points. The intraday high was 3706.722.

The index had gained 2.73 percent on Wednesday, with analysts noting that fears had eased regarding the potential economic harm from the quake.

Financial business magazine Caijing reported on its website yesterday that several mutual funds managers had been contacted the previous day by regulators who asked for help in maintaining stability in the market.

"We quite understand that the officials are worried the index might tumble, but the effectiveness of such means of supporting the market would quickly fade, and this might increase risks in the medium term," one trader said.

More than 25 Shanghai and Shenzhen A shares rose by their 10 percent daily limit. Turnover in Shanghai A shares remained active at 112.2 billion yuan, although this was down from Wednesday's 121.9 billion yuan.

Shanghai Pudong Development Bank Co and China Merchants Bank Co dropped on concern economic tightening measures will sap demand for loans. Pudong Bank, the Chinese partner of Citigroup Inc, dropped 3.1 percent to 30.08 yuan. Merchants Bank, the nation's biggest dual-currency credit-card issuer, lost 1.8 percent to 31.96.

Gree Electric Appliances Inc, China's largest maker of home air-conditioners, lost 6.4 percent to 46.60 yuan, the first decline in six days. The parent plans to sell a 4.82 percent stake in the company through the stock exchange this year for "a business revamp", Gree Electric said in a statement yesterday, without giving details.

HSI down 0.08%

Hong Kong stocks slipped yesterday in line with Shanghai shares, but Hutchison Whampoa jumped after a broker upgrade.

The benchmark Hang Seng Index closed down 0.08 percent at 25513.71 points. But the China Enterprises Index of Hong Kong-listed mainland companies, or H shares, finished 0.34 percent higher at 14027.55.

Hutchison's shares rose to a high of HK$83.6 before closing at HK$83.3, up 5.51 percent.

Agencies

(China Daily 05/16/2008 page14)