Chinese Stocks Fall for 1st Time in 8 Days; China United Drops

China's stocks fell with the benchmark index snapping a seven-day winning streak. China United Telecommunications Corp. paced declines among some of the biggest companies by value on concern recent gains have more than reflected the potential for earnings growth.

"The share prices of some companies have performed quite strongly recently," said Wu Kan, who manages the equivalent of $41 million at Dazhong Insurance Co. in Shanghai. "For the short term some stocks will face pressure as investors take profits."

Air China Ltd. led airlines higher on speculation a stronger yuan will cut the cost of debt payments in foreign currencies.

The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, slipped 29.25, or 0.6 percent, to 5,338.27 at the close. The measure gained 11 percent over the past seven days. The Shanghai and Shenzhen stock exchanges will be shut on Dec. 31 and Jan. 1 for New Year holidays.

The index has surged 162 percent this year, the biggest advance among the world's major stock benchmarks, as domestic investors have moved assets to equities from bank accounts to seek returns that beat inflation. The measure jumped 121 percent in 2006.

China United, which controls the nation's second-largest cell phone operator, dropped 0.21 yuan, or 1.7 percent, to 12.08. The stock jumped 26 percent over the past seven days. Its 14-day relative strength index, a moving average based on whether the gauge rose or fell was at 78 yesterday. A reading above 70 signals to some analysts a stock is poised to fall.

Daqin Railway

Daqin Railway Co., the operator of China's biggest coal transport network, fell 0.47 yuan, or 1.8 percent, to 25.62. China Petroleum & Chemical Corp., Asia's biggest oil refiner, also known as Sinopec, lost 0.58 yuan, or 2.4 percent, to 23.43. China Yangtze Power Co., owner of the world's biggest hydropower project, retreated 0.53 yuan, or 2.7 percent, to 19.49.

Air China, the world's biggest airline by market value, advanced 0.30 yuan, or 1.1 percent, to 27.44. China Southern Airlines Co., the nation's biggest carrier by fleet size, rose 0.66 yuan, or 2.4 percent, to 27.94. China Eastern Airlines Corp., the nation's third-largest by fleet size, surged 1.35 yuan, or 6.8 percent, to 21.29, the biggest gain since Nov. 29.

The yuan rose as much as 0.20 percent to 7.3032 against the dollar in Shanghai today, the highest since the scrapping of a fixed link with the U.S. currency in July 2005. An appreciating local currency cuts the cost for Chinese companies of repaying foreign currency-denominated debt.

Some banking and property stocks also gained as the yuan appreciated. Shanghai Pudong Development Bank Co., the Chinese partner of Citigroup Inc., roe 1.23 yuan, or 2.4 percent, to 52.80. Poly Real Estate Group Co., China's third-largest developer by market value, climbed 1.84 yuan, or 2.9 percent, to 64.82. A stronger yuan attracts foreign money to domestic property investments, raising prices and boosting demand for higher-valued mortgages.

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, retreated 0.9 percent to 5,261.56. The Shenzhen Composite Index lost 0.4 percent to 1,447.03.

The following stocks rose or fell and the stock symbols are in brackets after companies' names.

Baoshan Iron & Steel Co. (600019 CH), China's biggest steelmaker, added 0.04 yuan, or 0.2 percent, to 17.44. Xu Lejiang, chairman of parent Baosteel Group Corp., was elected as the chairman of Baoshan Steel after Ai Baojun was appointed as Shanghai's vice mayor, said the company in a statement today.

Industrial & Commercial Bank of China Ltd. (601398 CH), the nation's biggest listed lender, retreated 0.08 yuan, or 1 percent, to 8.13. The lender said it will own a bigger take in its Asia unit after Fortis agreed to sell holdings to help finance its purchase of ABN Amro Holding NV.

PetroChina Co. (601857 CH), the nation's biggest oil company, fell 0.43 yuan, or 1.4 percent, to 30.96. PetroChina and affiliate China National Oil and Gas Exploration and Development Corp. agreed to inject a combined 16 billion yuan ($2.2 billion) to fund the construction of a gas pipeline.

Ping An Insurance (Group) Co. (601318 CH) and China Pacific Insurance (Group) Co. (601601 CH): Ping An Insurance said it's leading a group that's seeking to buy a 14 percent stake in a mainland railway project for 16 billion yuan. The group will become the second-largest shareholder of the project, the insurer said in a statement yesterday. The express railway will link Beijing and Shanghai. Pacific Insurance was also included in the group, it said.

Ping An Insurance, China's second-biggest insurer, fell 2.14 yuan, or 2 percent, to 106.10. China Pacific Insurance, the nation's third-largest insurer, fell 0.86 yuan, or 1.7 percent, to 49.45.

Sichuan Changhong Electric Co. (600839 CH), China's second- biggest television maker, dropped 0.32 yuan, or 3.6 percent, to 8.63. China's securities regulator blocked a plan by Changhong to sell shares at a discount to investors including Microsoft Corp., the company said in a statement today without giving a reason.