China's benchmark Shanghai Composite Index underwent a seesaw on Tuesday morning due to profit taking triggered by the central bank's decision to raise deposit reserve ratio.

Bank shares opened lower as investors fear that higher deposit reserve ratios would rein in bank loans and affect their potential earnings. The downward correction led by bank and insurance shares dragged down the Shanghai index to the morning low of 4,380.32 points in one hour. The index closed the morning session at 4,444.08 points, up slightly from the previous close of 4,440.77.

Dealers say that confidence of the market prospect and economy helped lead to a rally in the last hour of the morning session.

Nearly 200,000 investors opened fund investment accounts last week, a weekly record in July, according to statistics from the China Securities Depository and Clearing Corporation.

The combined turnover of the Shanghai and Shenzhen bourses hit 130. 27 billion yuan in the morning, with 382 shares rising, 507 falling and another 110 leveling off on the renminbi-denominated A-shares market.

The Shenzhen Component Index on China's smaller market also went through a seesaw to close at 15,124.21 points compared with the previous close of 15,060.86 points.

(Xinhua News Agency July 31 2007)