China Stocks Decline Most in Seven Weeks; Shenhua Energy Drops

By Zhang Shidong

Oct. 6 (Bloomberg) -- China's stocks fell, giving the benchmark index its biggest loss in seven weeks, after prices of commodities slumped and the global credit crisis deepened in Europe.

China Shenhua Energy Co. and Datong Coal Industry Co., the country's top producers of the fuel, tumbled by the 10 percent limit as Asian coal prices fell for a seventh week. PetroChina Co., the nation's biggest oil company, fell 5.1 percent after crude dropped for a fourth day. Haitong Securities Co. jumped 10 percent after the securities regulator said it will soon allow margin trading and short selling.

The CSI 300 Index declined 114.96, or 5.1 percent, to 2,128.70 at the close, the most since Aug. 18. China's markets were closed last week, when the MSCI Asia Pacific Index fell 8 percent, the most since August last year, on concern a U.S. bank bailout will fail to stimulate demand for the region's exports.

``The domestic market is mainly playing catch-up with the sour sentiment facing the regional markets,'' said Zheng Tuo, who manages $790 million at Bank of Communications Schroders Fund Management Co. in Shanghai and said he bought shares that may benefit from any loosening of lending rules. ``The central bank may relax its monetary policies in the near future to bolster the economy.'' He declined to give details on his stock purchases.

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