China's Stocks Slump Most in Six Weeks Ahead of Olympic Games

By Zhang Shidong

Aug. 8 (Bloomberg) -- China's stocks tumbled the most in six weeks after an expected pre-Olympic rally failed to materialize and amid speculation of security threats.

China Shipping Development Co. led a drop among shipping lines after freight rates retreated. Air China Ltd. dived after yesterday's gain in crude oil renewed concerns higher raw- material costs will erode earnings. Citic Securities Co., the brokerage unit of the country's biggest investment company, declined as the value of shares traded on China's two principal exchanges dropped to the lowest level since December 2006.

The CSI 300 Index dropped 128.98, or 4.7 percent, to 2,591.46 at the close, the biggest slump since June 27 and the lowest close since March 7, 2007. Declines accelerated after the market reopened following its midday break.

The CSI 300 Index has lost 51 percent this year on concern rising fuel prices and central bank measures to curb inflation will hurt earnings. The 16-day Beijing Games start tonight.

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