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Index drops as inflation concerns spread
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Shanghai's key stock index ended lower today after the central bank said it will toughen measures against inflation to lessen the effect of higher fuel prices.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, lost 2.52 percent, or 71.32 points, to 2,760.42 at 3pm.

Losers in the Shanghai market outnumbered gainers 576 to 202 while 21 were unchanged. The index lost 37.06 points or 1.3 percent in a wild ride that saw big swings from day to day last week.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 1.86 percent, or 14.81 points, to 779.94 today.

China Merchants Bank Co and Ping An Insurance (Group) Co paced declines on concern earnings will be eroded. Aluminum Corp of China Ltd, also called Chalco, dropped after saying first-half profit will probably decrease by more than 50 percent.

Investors started selling shares after Zhou Xiaochuan, the governor of the central bank, said the country may formulate "stronger policies" to tackle inflation. Higher energy prices may push the consumer price index higher, Zhou told reporters in New York on Friday.

China Merchants lost 3.61 percent to 23.76 yuan (US$3.45) while Industrial and Commercial Bank of China, the country's biggest lender, was down 1.74 percent to 5.09 yuan.

Ping An was among losing insurers today. Ping An decreased 3.34 percent to 48.68 yuan while China Life, the biggest insurer, buckled 1.64 percent to 25.12 yuan.

Aluminum Corp of China Ltd, the nation's largest producer of the metal, said its first-half profit will fall more than 50 percent because of higher costs and production disruption from snowstorms. The stock lost 5.24 percent to 12.30 yuan.

Shanghai Bashi Industrial (Group) Co, the city-controlled bus company, slid the daily cap of 10 percent to 7.65 yuan. The company said today that it plans to sell 8.8 billion yuan of new shares to Shanghai Automotive Industry Corp in return for its auto parts business.

Heavyweights such as Sinopec and PetroChina also contributed to today's loss.

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