Chinese shares slumped 4.25 percent on Thursday amid growing fears over a global recession, while domestic investor confidence was further weakened as listed companies reported falling corporate earnings for the third quarter.

The benchmark Shanghai Composite Index lost 84.73 points to end at 1,909.94 points. The Shenzhen Component Index finished at 6,166.56 points, down 3.74 percent.

Aggregate turnover edged up to 51.32 billion yuan (US$7.5 billion) from Wednesday's 42.37 billion yuan.

The key Shanghai index had declined more than 68 percent from exactly a year ago when the index recorded an all-time high of 6,124 points.

Coal producers led the fall and continued to shed losses for a second day as global prices dropped and coal exports slowed. Most coal firms slumped by the daily 10 percent limit at Thursday's close.

China Shenhua, the country's major coal producer, slid 9.58 percent to 18.02 yuan. China Coal Energy Company fell 10.1 percent to 7.01 yuan. Datong Coal Industry, based in the coal-rich Shanxi Province, dropped 9.94 percent to 9.88 yuan.

Heavyweights were also weak due to dampened investor confidence. Sinopec, Asia's top oil refiner, shed 6.93 percent to 8.46 yuan. China Ping An, the country's leading insurer, fell 8.27 percent to 26.3 yuan.

Losses of banks and brokers dragged down the market as well. Haitong Securities declined 8.64 percent to 18.18 yuan, and CITIC Securities fell 7.67 percent to 18.29 yuan.

The Industrial and Commercial Bank of China lost 3.15 percent to close at 4 yuan, and China Merchants Bank was down 5.71 percent to 14.33 yuan.

Losers outnumbered gainers by 808 to 65 in Shanghai and 697 to 47 in Shenzhen.

Investor confidence was hit by news of lower corporate earnings. More than half of the 23 companies that had released quarterly reports revealed profit losses in the third quarter, according to the mainland consultant Wind Info.

The real estate sector bucked the trend and rose on expectations of more interest rate cuts. Poly Real Estate went up 2.86 percent to 14.38 yuan, and COFCO Property gained 4.36 percent to 5.27 yuan. China Vanke rose 1.19 percent to 6.79 yuan.

China's stock market needs the stimulus of sound economic data as its performance relied on the country's mid- and long-term economic growth, according to a Founder Securities report.

Basing Investment said in a report government policies would play a key role in future development of the market, as investors would rely heavily on policies at a time of global fluctuation.

The slump in China markets on Thursday came after Wall Street reported the biggest fall in two decades overnight. Regional markets in Asia mostly fell amid growing fears of a global recession, with Japan plunging more than 11 percent and Hong Kong down 4.8 percent.

(Xinhua News Agency October 16, 2008)