Chinese stocks close lower on policy concerns

Chinese shares retreated nearly 1% on Wednesday amid regional market declines and investor uncertainties about further monetary tightening.

The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, slumped 0.99% or 42.79 to 4292.65 points after fluctuating between 4352.82 and 4210.96 points during the whole day.

Similarly, the Shenzhen Component Index on the smaller Shenzhen Stock Exchange moved down 0.92% or 145.01 to 15601.21 points, after touching an intraday low of 15092.47 points.

The combined turnover on the two bourses decreased to RMB 171.7 billion from RMB 203.7 billion of the previous trading day.

Premier Wen Jiabao on Wednesday said in his government work report that China needed to follow a prudent fiscal policy and a tight monetary policy this year to accomplish the tasks of macroeconomic regulation.

Steel makers undermined the market yesterday. Baoshan Steel<600019>, China's biggest steel maker slumped 4.69% to RMB 15.65, after registering a 4.5% drop on the previous day. Wuhan Iron & Steel Co<600005> plunged 6.29% to RMB 18.19. And Tangsteel<000709> decreased 9.69% to RMB 20.50.

Property stocks also underperformed. China Merchants Property Development Co<000024><200024>, a leading real estate firm, fell 2.07% to RMB 47.40. However, the nation's biggest developer China Vanke<000002><200002> rebounded from morning big loss of up to 7% to end 2.67% higher at RMB 23.05.

As a whole, winners outweighed losers by 437 to 398 in Shanghai and losers outnumbered winners by 342 to 319 in Shenzhen.