News & Reports News Year 2010 May , 2010 for third consecutive week Index slips

for third consecutive week Index slips

SHANGHAI'S stock market yesterday fell, capping a third straight weekly loss, on concerns over the worsening economic situation in the eurozone and slower economic growth.

The benchmark Shanghai Composite Index fell 0.7 percent to 2,380.22 points, the lowest close since October 24.

The index lost a collective 1.5 percent in the past week after a preliminary Purchasing Managers' Index released by HSBC dropped to the lowest level since March 2009, suggesting shrinking manufacturing activities in China.

Meanwhile in Europe, Fitch cut Portugal's bond rating by one notch from BBB- to a junk rating of BB+ on Thursday, citing its forecast that the country's economy will contract by 3 percent next year.

Guo Rui, an analyst at Huaxi Securities, said: "The global economic situation may continue to worsen, dragged by deterioration in the European debt crisis."

Banks retreated from previous gains on concerns that the current tight monetary policies will remain in place.

The Industrial and Commercial Bank of China was down 1.4 percent to 4.22 yuan after its chairman said "very high" inflationary pressure will restrict easing of monetary policies. China Merchants Bank dipped 0.9 percent to 11.48 yuan.

But a Barclays Capital report released yesterday said China will cut reserve requirements for banks in the first quarter of 2012, and Chinese bank stocks may perform better in the next 12 months.