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Shares end lower after H1 economic data

(Agencies)
Updated: 2008-07-17 16:40

Chinese A shares closed lower for a third consecutive day after the government released key economic data showing a slowing of consumer inflation but higher producer prices.

Banks and property stocks turned lower after a short-lived rebound in morning trade, as worries over monetary tightening persisted, dealers said.

The benchmark Shanghai Composite Index closed down 21.09 points or 0.78 percent at 2,684.78, off a high of 2,773.28 and low of 2,676.15.

Turnover fell to 51.45 billion yuan ($7.54 billion) from 60.36 billion yuan yesterday.

"Financials and property stocks pulled back again in afternoon trade, giving up early gains arising from bargain-hunting and the oil price retreat," said Wang Fan, an analyst with Donghai Securities.

He said that downward pressure remains in the two sectors with no signs of a relaxation in monetary policy in the near term.

State media reported late yesterday that the National People's Congress wants the country to maintain a tight monetary policy as inflation remains a key problem.

The National Bureau of Statistics said the consumer price index rose 7.1 percent year-on-year in June, down from 7.7 percent in May, but it noted that inflationary pressures remain high.

It also added that the producer price index (PPI) in June rose 8.8 percent from a year earlier, up from 8.2 percent in May, it said.

The gross domestic product (GDP) rose 10.4 percent year-on-year in the first half, well below the full-year 2007 level of 11.9 percent. The bureau described the growth rate as steady but fast.

"The economic data were in line with market expectations, although PPI growth was a bit of a surprise," said Wu Dazhong, an analyst with Shenyin & Wanguo Securities.

PPI rising in the second half will pose further risks for corporate earnings, he said.

Analysts said the market will continue its consolidation on the understanding that economic growth will slow and monetary policy will tighten.