Index down at noon as industrials slip

SHANGHAI stocks closed lower this morning, shadowed by weak industrial shares and insurers.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, fell 0.38 percent, or 19.93 points, to 5,288.96 at 11:30am today.

Losers in the Shanghai market outnumbered winners 459 to 299 and 88 were unchanged.

The Shenzhen Composite Index, which covers the smaller mainland stock market, was down 0.25 percent, or 3.64 points, to 1,449.83.

Investors in industrial shares had a gloomy early session today.

China Oilfield Services Limited Co lost 3.91 percent, or 1.40 yuan (19 US cents), to finish the early session at 34.44 yuan and PetroChina Co, the nation's biggest oil producer and a key heavyweight in the market, declined 0.64 percent, or 0.20 yuan, to 31.19 yuan.

PetroChina and affiliate China National Oil and Gas Exploration and Development Corp agreed to inject a combined 16 billion yuan to fund the construction of a gas pipeline.

Insurers were also among the losers this morning despite a positive report saying that the country's second-biggest insurer led a group to take a 14 percent stake in a mainland railway project for 16 billion yuan.

Ping An Insurance, China's second-biggest insurer, shed 2.07 percent, or 2.24 yuan, to 106 yuan. China Pacific Insurance, the nation's third-largest insurer, buckled 2.03 percent, or 1.02 yuan, to 49.29 yuan.

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.

China yesterday set up the Shanghai-Beijing Express Railway Holding Company Ltd to lead construction of the express railway, which will cut the travel time between the cities from 12 hours to five, Xinhua news agency reported.

On the positive side, airline stocks rose on speculation a stronger yuan will further cut the cost of debt payments in foreign currencies.

Air China, the world's biggest airline by market value, gained 3.98 percent, or 1.08 yuan, to 28.22 yuan and China Eastern, the nation's third-largest carrier, jumped 4.61 percent, or 0.92 yuan, to 20.86 yuan.

The yuan rose as much as 0.18 percent to 7.3045 against the US dollar in Shanghai today, the highest since China scrapped a link with the US currency in July 2005. An appreciating local currency cuts the repatriated value of airlines' foreign currency denominated debts.