SHANGHAI'S stock market continued to drop in morning trade as no economic upsides are in sight to boost investor sentiment.

The key benchmark Shanghai Composite Index shed 0.58 percent to 2,271.6 points. Turnover stood at 34.1 billion yuan (US$5.4 billion).

The index dropped to a 4-month low yesterday as worries over China's economic downturn intensified after manufacturers reported a 5.2 percent year-on-year drop in their earnings for the first two months of this year and market observers predicted another slump in the yuan funds accumulated from foreign exchange in March.

Chen Xinyu, analyst at Great Wall Securities, said the market is expecting another bank reserve requirement ratio cut or interest rate lowering to boost the economy and sustain its growth. But on the other hand, the pressure for curbing inflation still persists, making it less likely to ease the monetary policies.

Material producers fell amid worries that they will face problems of oversupply if China's economy continues its downward track.

Jiangxi Copper tumbled 2.27 percent to 24.13. Zijin Mining Industry tumbled 2.14 percent to 4.12 yuan. Sinopec, Asia's largest refiner, dropped 1.01 percent to 9.77 yuan.

Banks also lost, though slightly. China Construction Bank lost 0.21 percent to 4.73 yuan. Industrial and Commercial Bank of China dipped 0.23 percent to 4.3 yuan.

Source:shanghaidaily