THE Shanghai Composite Index fell for the fourth consecutive day on a slowdown in China's state-owned enterprises' profit growth, and an expected credit crunch.

The key index dropped by 0.44 percent to 2,181.52 points in the morning, with a turnover of 27.3 billion yuan (US$4.29 billion).

China's state-owned enterprises have made a combined profit of 2.04 trillion yuan from January to November this year, the Ministry of Finance said yesterday.

Despite the 9.2 percent annual rise, a 5.8 percent monthly drop indicates slowing growth that has extended into the fifth consecutive monthly decline.

Worries about a liquidity crunch intensified, as it is a routine for banks to absorb as much cash as they can to meet the year-end reserve requirement target.

The textiles sector led the fall from the beginning of trade until the noon break and posted a slump of 3.74 percent.

Premier Wen Jiabao said in a statement earlier this week during his visit to Jiangsu Province in eastern China: "The economic downturn and high price levels are shrinking the profits of Chinese enterprises, especially the textile industry, which is currently in deep water."