Chinese share prices were sharply lower in Wednesday's morning trade amid worries that strong inflation data for November may prompt further economic tightening measures.

 

China's consumer price index, the major gauge of inflation, hit the 11-year-high of 6.9 percent in November, up from 6.5 percent in October, the National Bureau of Statistics said on Tuesday.

 

The benchmark Shanghai Composite Index, which covers both A and B shares, plummeted 104.69 points, or 2.02 percent, to end in morning trade at 5,070.39.

 

Banks and property developers led the decline. Investors dumped the stocks after the People's Bank of China (PBOC) and China Banking Regulatory Commission (CBRC) said in a notice on Tuesday that commercial banks should define a "second home" according to the property owned by the families of mortgage applicants rather than the applicant alone.

 

The notice is a supplementary to the rule released by the PBOC and the CBRC in September that raised mortgage deposits for homebuyers who intend to buy a second apartment, a move to curb speculation on property transactions. "Second" mortgage holders are required to put a down payment of at least 40 percent and pay a 10-percent premium on their interest rate.

 

Shanghai Pudong Development Bank plunged 6.05 percent to 49.85 yuan, and heavyweight Industrial and Commercial Bank of China fell 3.05 percent to 7.96 yuan.

 

China Vanke, the nation's largest listed property developer, dropped 4.64 percent to 30.80 yuan.

 

Wan Bing, an analyst with Guangfa Securities, said the overnight sharp decline of Wall Street also dampened investors' sentiments in China.

 

Overnight, the Dow Jones Industrial Average, fell 294.26 points, or 2.14 percent, to 13,432.77 after the Federal Reserve cut interest rate by a quarter percentage point, lower than the expected half a percentage point.

 

(Xinhua News Agency December 12, 2007)