SHANGHAI'S key stock index dropped today on concerns that the eurozone debt crisis may escalate after 15 European nations were put on watch for possible credit downgrades.

The Shanghai Composite Index, echoing the general retreat of the Asian markets, eased 0.31 percent to close at 2,325.91 points. Turnover stood at 42.6 billion yuan (US$6.72 billion).

Shanghai's investor sentiment showed no sign of improvement after four straight weekly losses as fears of a looming global recession grew over the downgrade warnings sent by Standard & Poor's to the 15 European nations, including AAA-rated Germany and France.

French and German leaders pledged to restore regional financial stability by forming a closer fiscal union after the rating agency said the downgrades were pending on the outcome of the European Union leaders' summit due later this week.

Manufacturers led the decline on Shanghai's stock market, as the grim European economic outlook could dampen their demands for imports from China, and further slow down the country's economy.

Shanghai Zhenhua Heavy Industries Co, a machinery maker that has close business connections with Europe, slid 2.38 percent to 5.33 yuan. China Garments dropped 3.37 percent to 8.61 yuan.

Source:shanghaidaily