China Stocks Fall for First Day in Four; Air China Declines

By Zhang Shidong

June 27 (Bloomberg) -- China's stocks fell for the first time in four days on speculation the government will increase interest rates to help tame inflation as rising fuel prices threaten corporate profits.

Shanghai Pudong Development Bank Co. dropped on concern lending growth will slow. China Vanke Co. led property developers lower on concern access to financing for real estate will be restricted. China Petroleum & Chemical Corp. and Air China Ltd. fell after crude oil traded near a record high.

``Investors are panicking,'' said Zhang Ling, who manages the equivalent of $1.1 billion at ICBC Credit Suisse Asset Management Co. in Beijing. ``There's speculation in the market that the central bank will raise interest rates over the weekend.''

The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, declined 121.98, or 4.1 percent, to 2,858.98 as of 11:21 a.m. local time, set to snap a three-day, 6.8 percent advance. It has gained 0.4 percent this week.

All of the gauge's 10 industry groups fell, with just 19 of its 300 constituents rising. The benchmark has fallen 46 percent this year as the central bank ordered lenders to set aside a record amount of money as reserves this year. The People's Bank of China raised interest rates six times in 2007.

To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net