China Eastern shares fall after Air China comment

Shares in China Eastern Airlines Ltd. fell Monday after the parent of rival carrier Air China Ltd. said it would outbid Singapore Airlines for a stake in the Shanghai-based airline.

China National Aviation Holding Corp., Air China's parent company, said Sunday it would offer a higher price for a stake in China Eastern if shareholders Tuesday rejected an offer by Singapore Airlines and its parent, the government investment agency Temasek Holdings Ltd.

China Eastern shares initially rose as much as 4 percent Monday on the Hong Kong Exchange, but later they sank, dropping 3.8 percent to HK$6.66 in the afternoon. In the overall market, the benchmark Hang Seng Index fell 1.24 percent.

Singapore Airlines and Temasek have offered to buy a combined 24 percent stake in China's third-largest carrier for HK$7.2 billion (US$923.8 million), or about HK$3.80 a share. Singapore Airline shares fell 3.2 percent in the city state. Air China was off 2.6 percent in Hong Kong at HK$10.52.