SHANGHAI'S stock market posted a third consecutive daily retreat yesterday as investor concerns over China's economic prospects persisted and the liquidity crunch in the market intensified.

The Shanghai Composite Index slumped 1.1 percent to 2,191.15 points, heading toward a seventh straight losing week.

The market registered a slight increase by the noon break as the equity investment plan of the 2.1 trillion yuan (US$332 billion) local pension funds backed up by Dai Xianglong, the head of the National Council of Social Security Fund, signaled the government's intention to revive the slumping stocks.

But prospects of a further economic slowdown still weighed on investors' minds.

Ping An Insurance, the country's second-largest insurer, dropped 5.2 percent to 34.43 yuan on a plan to raise 26 billion yuan through convertible bonds to lift its capital adequacy. Sun Ting, an analyst at Shenyin and Wanguo Securities, said the sale may further mop up liquidity in the market, which has seen sluggish turnover for several months.

Financials declined amid concerns over their ability to cushion the drop in housing prices. China Construction Bank fell 0.9 percent to 4.52 yuan. The Industrial and Commerce Bank of China slid 0.5 percent to 4.13 yuan.

Source:shanghaidaily