Shanghai's hard currency B share index fell 0.70 percent to end at 120.553 points and Shenzhen's slipped 1.02 percent to 195.39.

"The markets are very dull as most investors kept on the sidelines due to the approach of the end of the year," said analyst Luo Yanxin of Guohai Securities.

Turnover on the B share markets, open to foreign and Chinese investors, was only US$8.25 million in Shanghai and HK$47.57 million (US$6.1 million) in Shenzhen.

The biggest Shanghai decliner was property developer Jiangsu Xincheng Co, which reported a small profit this year after making heavy losses in 2000 and 2001. Its shares fell 1.85 percent to US$0.53 on thin volume of 303,700 shares.

Chicken breeder Dajiang Group Co, which posted net losses for the first nine months as well as for 2000 and 2001, was the volume leader. It fell 1.74 percent to US$0.452, with 4.47 million shares changing hands.

Analysts said weak investor confidence, after a bearish year for stock markets, also trimmed trading interest.

"Most investors do not expect to make any money trading stocks in the near term. This prevents fresh liquidity from flowing into the markets," said analyst Jin Guanfeng of Haitong Securities.

China's share prices have been battered by poor company earnings, a government crackdown on market irregularities which unveiled many corporate scandals, and frequent share offerings.

Analysts said they expect the benchmark Shanghai composite index to move narrowly between 1,400 and 1,450 points towards the end of the year.

The index closed down 0.65 percent at 1,421.515 points yesterday.

The Shenzhen sub-index dipped 0.64 percent to 2,887.14 points.

The Shanghai composite, which groups B shares and yuan-denominated A shares, has fallen 13.6 percent this year and is down 36.7 percent from its peak in June 2001.

Shenzhen's A share index fell 0.70 percent to 430.48 points and Shanghai's slipped 0.65 percent to 1,485.491.

A shares are open to Chinese and select foreign investors.

China's yuan firmed one notch against the US dollar to close at 8.2774 on Wednesday, supported by exporters' dollar sales, dealers said.

The yuan moved in a narrow range of 8.2773 to 8.2775, after closing on Tuesday at 8.2775. Turnover rose to a moderate $580 million from $420 million.

"A rise in dollar selling from exporters pushed the yuan slightly up today," a Shanghai-based bank dealer said.

Exporters usually log healthy earnings in December due to robust shipments ahead of the year-end holidays.

Most trade firms are required to sell all their hard currency earnings to banks designated to trade on the Shanghai-based national forex market.

China's exports have been strong this year, jumping 21.6 percent year-on-year to US$293.69 billion in the first 11 months, official statistics showed.

The yuan, which is not fully convertible under the capital account, has mainly moved near the strong end of the central bank-enforced trading range of 8.2760 to 8.2800 this year.

The yuan strengthened against the Japanese yen to end at 6.8666 versus 100 yen from 6.8714.

The Chinese currency weakened against the euro to close at 8.5308 yesterday from 8.4941. The yuan also eased one notch to 1.0611 against the Hong Kong dollar from 1.0610.

(China Daily December 26, 2002)