Shares end at six-year lows on large cap sale

China's shares shed 1 percent Thursday to end at their lowest in nearly six years as investors sold large caps amid worries that the government might act further to rein in a racing economy.

The benchmark Shanghai Composite Index finished at 1,172.556 points, its lowest close since it ended at 1,168.72 points May 21, 1999.

Large caps succumbed to a selling spree as speculation revived of further credit tightening after the latest Chinese economic data showed stronger-than-expected growth. China raised interest rates in October for the first time in nine years.

The National Bureau of Statistics said that China's economy expanded 9.5 percent in the year through the first quarter, exceeding a median forecast of 9.1 percent in a recent survey of 10 economists.

Asia's top oil refiner Sinopec Corp. ranked among the most active counters.

The stock slid 1.2 percent to end at 4.17 yuan (US$0.5), helping drag a newly introduced common index grouping 300 of the largest stocks on the Shanghai and Shenzhen exchanges down 0.7 percent to close at 943.981 points.

The government's credit curbs and a bulging pipeline of stock sales are among key factors to have pushed China's benchmark index down 7.4 percent so far this year, extending a 15 percent slump last year that made it the worldĄŻs worst-performing major index.

Analysts expected a weak rebound.

"The market could stage a bounce in the coming sessions after scoring a new low today," said Zhang Qi at Haitong Securities. "But it is unlikely to shrug off its overall sluggishness in the recent time because performance of large caps is expected to remain weak due to expectations of further credit tightening."

Steel counters suffered heavy losses Thursday amid fresh signs of an official clampdown on the overheated industry.

Source: Shenzhen Daily/Agencies