A stock investor lowers his head in the securities office in Shanghai as the index dives May 23, 2005. (newsphoto)

China's shares closed at their lowest levels in six years on Monday after the key index suffered its biggest single-day loss in seven months as investors cashed out of textile stocks following a rise in export tariffs.

The higher tariffs, which apply to 74 textile lines from June 1, were imposed to cool a trade dispute with the United States and the European Union.

The benchmark Shanghai composite index , which had chalked up a string of successive six-year lows this month, closed at 1,070.844 points, its lowest close since May 18, 1999, when it finished at 1,059.87.

It shed 2.6 percent on Monday, the biggest single day fall since October 14, 2004, when it dived 3.9 percent.

Analysts said the key index was likely to continue falling this week to test the psychologically key 1,050 point level.

Several textile counters fell their 10 percent daily limits to lead most decliners. Garment maker Shanshan Co. Ltd. fell to 3.56 yuan, while knitwear producer Feiya Textile Co. Ltd. slipped to 4.10 yuan.

China's index has dived 15.4 percent so far in 2005, matching in less than five months the fall in 2004 that made it the world's worst-performing major index, hit by a slew of negative factors including Beijing's economic-cooling steps.

"Many investors have trimmed their positions as they expect sustained efforts to cool the economy to hurt corporate bottom lines," said Zheng Weigang, a senior analyst at Shanghai Securities.

Large-caps were also hit, with Sinopec Corp. , Asia's largest refiner and the largest capitalised firm on the mainland bourses, shedding 3.7 percent to 3.66 yuan on Monday.

The stock fell on worries that falling crude prices might trigger price cuts in oil products and erode its bottom line.

(Agencies)

dive : drop steeply（俯沖）