(Xinhua)
Updated: 2008-03-20 12:49

BEIJING - Chinese shares continued to slide on Thursday morning as overnight heavy losses on Wall Street dealt a new blow to the weak investors sentiment.

The benchmark Shanghai Composite Index ended the morning session 116.75 points, or 3.10 percent lower at 3,644.86 on profit taking. It tumbled as much as 6.52 percent at one point before bargain hunting trimmed losses.

The key index opened at 3,721.50, down 40.11 points, or 1.07 percent, from the previous close. On Wednesday, it rose for the first time in six days, gaining 2.53 percent to 3,761.61 on regional market rallies.

The Shenzhen Component Index was 88.19 points, or 0.68 percent, to 12.956.02 after plunging as much as 5.77 percent at one point.

Overnight, profit taking sank the Dow Jones Industrial Average by 293.00 points, or 2.36 percent, to 12,099.66 in spite of better-than-expected earnings from Morgan Stanley.

Investors locked in profits immediately after the rally for safe returns because they had little belief in long-term investment following recent sharp sell-offs, analysts said.

The decline also came on speculation that China may further raise interest rates to ease inflationary pressures following the reserve requirement ratio rise, according to Beijing Shoufang Investment Consulting.

PetroChina, which accounts for a quarter of the key Shanghai index, led the decline. Its shares plunged 6.73 percent to 21.06 yuan on the disappointing news its net income rose at an annual rate of 2.4 percent last year.

Financial shares fell sharply. China Life dropped 5.77 percent to 30.20 yuan and its smaller rival, Ping An Insurance, fell 5.01 percent to 54.09 yuan. Industrial and Commercial Bank of China was down 2.83 percent to 5.49 yuan.

Metals stocks were also among the heaviest losers as international metals prices slumped amid U.S. recession fears. Aluminum Corp. of China (Chalco) fell 5.14 percent to 21.76 yuan. Yunnan Tin Co. shed 8.57 percent to 44.80 yuan and Yunnan Copper Co. lost 7.13 percent to 34.90 yuan.