Chinese shares closed the Tuesday morning session 0.52 percent lower, after having fallen sharply in earlier trading as investors took profits.

The Shanghai Composite Index fell 12.42 points to 2,376.97, while the Shenzhen index declined 1.06 percent, or 93.02 points, to 8,678.02. The Shanghai Index rose to more than 2,400 points shortly after the opening but then plunged by more than 3 percent.

The stock market has risen more than 31 percent since the last trading day of 2008, when it stood at only 1,820.81 points.

Analysts had warned that a market correction was looming, even though the Shanghai bourse had record high turnover of 180.56 billion yuan (US$26.36 billion) Monday.

Recent gains were "mainly driven by the government's stimulus policies, excess liquidity and recovering investor confidence. However, the economy has not shown signs of recovery," Tebon securities analyst Wu Binghua said.

The latest gloomy news came Monday, when statistics showed that China's actual use of foreign investment plunged 32.67 percent year-on-year to US$7.54 billion in January.

(Xinhua News Agency February 17, 2009)