Chinese shares ended the morning session slightly lower as the benchmark Shanghai Composite Index fell 0.39 percent to 2,986.84 points on Monday, the first trading day after the Chinese Lunar New Year holiday.

The index, which covers both A- and B-shares, opened at 2,999.09 points, up by 0.61 points, or 0.02 percent higher from the previous record closing of 2,998.47 points.

The loss followed the news that the People's Bank of China, the country's central bank, raised the required reserve ratio for financial institutions engaging in deposit business by 0.5 percentage points to 10 percent on Sunday.

The increase of required reserve ratio, however, wouldn't deal a blow to the bull market, said Cheng Rongqing, an analyst with South China Securities.

Zhao Jianxing, of China Merchants Securities, said that the announcements of higher corporate profits of most listed companies in 2006 would push the equity market to a new high at the end of the first quarter.

Source: Xinhua