Shanghai's key stock index fell for a third day to its lowest since February 1 as most blue chips sank.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, tumbled 3.47 percent, or 156.89 points, to 4,370.29. The index fell 2.9 percent this week.

Losers in the Shanghai market outnumbered gainers 680 to 161 while 11 remained unchanged.

The Shenzhen Composite Index, which covers the mainland's smaller stock market, shed 2.90 percent, or 41.21 points, to 1,382.

Shanghai Pudong Development Bank continued to lead the plunge among lenders today, heading for its biggest drop streak in nearly nine years.

Pudong bank, partly owned by Citigroup Inc, sank 7.52 percent, or 3.52 yuan (50 US cents), to finish at 39.98 yuan. It lost 5.98 percent yesterday and slumped the daily cap of 10 percent on Tuesday. The tumble started after the bank said it plans to sell one billion new shares to the public.

China Merchants Bank, the nation's biggest dual-currency credit-card issuer, dropped 5.75 percent, or 1.85 yuan, to 30.35 yuan, the lowest in more than seven months.

The bank said today that 2.53 billion shares will become tradable next week, raising concerns that the value of existing holdings in the company will be diluted.

Shanghai Automotive Industry Corp, CNOOC Investment Co and 75 other institutional investors will be allowed to sell part of their holdings, representing 17 percent of total outstanding shares in the company, on February 27, China Merchants Bank said in a statement today.

The shareholders were barred from selling their shares in the bank for at least two years after their stock became convertible into tradable ones in a mandatory program that started in 2005.

Ping An Insurance (Group) Co, the nation's second-largest insurer, has lost more than a quarter of its market value since announcing plans to sell stock a month ago. Ping An decreased 4.27 percent, or 3.10 yuan, 69.42 yuan today.

China Shipping Development Co, the nation's biggest oil carrier, decreased 1.19 percent, or 0.45 yuan, to 37.24 yuan while Baosteel Group Corp, the country's biggest steelmaker, was down 4.29 percent, or 0.79 yuan, to 17.62 yuan.

China Shipping and Baosteel Group Corp plan to form an US$8 million venture to ship iron ore. China Shipping will own 51 percent of the venture, while Baosteel's trading unit will own the rest, China Shipping said yesterday.

On the positive side, Shandong Gold Mining Co, the second-largest, rose 1.10 percent, or 2.23 yuan, to 204.23 yuan.

Gold futures surged to a record in New York yesterday as a slumping dollar and soaring commodity costs boosted the appeal of the precious metal as an inflation hedge.

(Shanghai Daily February 22, 2008)