Shares fell 1.19 percent on Friday, reacting to news that the producer price index (PPI) for industrial products had risen 8.1 percent year-on-year in April, foreshadowing further inflation pressure.

The benchmark Shanghai Composite Index, which covers A and B shares, closed at 3,613.49 points, down 43.35 points. The Shenzhen Component Index fell 237.16 points, or 1.78 percent, to 13,080.37 points.

Combined turnover rose from 153.85 billion yuan (21.98 billion U.S. dollars) on Thursday to 188.18 billion yuan. Losing shares outnumbered gainers by 478 to 351 in Shanghai and by 356 to 280 in Shenzhen.

The National Bureau of Statistics (NBS) is scheduled to release the April consumer price index (CPI) figure next week.

Li Xiaochao, speaking for the NBS, said higher ex-factory prices could lead to a rising CPI, as producers might seek to pass on their own rising costs to consumers.

Qin Hong, an analyst at Bohai Investment, said if the CPI growth rate in April was higher than 8.5 percent, the stock market would go through a correction period as investors feared new tightening measures.

However, Qin added, if the April CPI came in below 8 percent, the Shanghai Composite Index could breach the psychological 4,000-point level in the near future.

Among the top 10 heavyweights, only Ping An Insurance managed to rise on Friday, gaining 2.23 percent to 64.08 yuan. The second-largest life insurer said on Thursday it wouldn't pursue a controversial refinancing plan within the next six months.

PetroChina, the country's largest oil producer, dipped 0.44 percent to 17.91 yuan, while Sinopec, the largest oil refiner, lost 2.95 percent to 12.17 yuan.

Financial shares fell across the board as the Bank of Communications, the country's fifth-largest lender and the Shanghai Pudong Development Bank (SPD) have non-tradable shares becoming negotiable next week.

Industrial and Commercial Bank of China, the country's biggest lender, slid 2.69 percent to 6.14 yuan. Bank of Communications tumbled 3.68 percent to 9.42 yuan. SPD sank 5.1 percent to 28.08 yuan.

Spurred by rising chemical fertilizer prices, major domestic chemical fertilizer manufacturer Liuguo Chemical Industry Co. climbed 2.94 percent to 14.02 yuan, while Hubei Yihua Chemical Industry Co. surged 4.23 percent to 23.14 yuan.

(Xinhua News Agency May 10, 2008)