SHANGHAI stocks fell by noon break on higher-than-expected Consumer Price Index, as it dispelled speculation the government will ease monetary policy to boost the economy.

The Shanghai Composite Index lost 0.23 percent, or 5.41 points to 2,302.18, with a turnover of 30.5 billion yuan (US$4.81 billion) by noon.

CPI rebounded to 3.6 percent in March from February's 3.2 percent, the National Bureau of Statistics said today on its website.

The figure, which is higher than market expectations, has weighed on market sentiment, and dragged the key index down the most this month.

Lenders dropped on dampened hopes the government will ease monetary policy. China Citic Bank led the fall among banks, and tumbled 1.4 percent to 4.23 yuan. Industrial And Commercial Bank of China, the country's largest lender shed 0.2 percent to 4.28 yuan. Bank of China retreated 0.7 percent to 3 yuan.

China Vanke Co, China's biggest property developer has reportedly used cheap and moldy materials to decorate apartments – adding to investor worries that smaller developers might have similar issues. The sector lost 0.1 percent on average by the noon break. Vanke's shares tumbled 1 percent to 8.29 yuan.

Meanwhile, Shenyin Wanguo Securities said today in a report that monetary policy will tend to ease, as economic growth and inflation will further ease in the future.