Chinese share prices closed down 1.07 per cent on Thursday led lower by bank shares as part of global selloffs amid moun

Sentiment took another hefty blow after two Chinese railway companies announced foreign exchange losses of more than 300 million dollars, becoming the latest Chinese firms to fall victim to bad currency bets, traders said.

Property shares rose after the government announced tax breaks for certain housing transactions and relaxed mortgage rates for first-time home-buyers, traders said.

The finance ministry said late Wednesday it would lower the floor on mortgage rates to 0.7 times the central bank's benchmark rates for first-time home buyers and cut the down payment requirement to 20 per cent of the purchase price.

However, the government's latest moves to stimulate housing demand also triggered a selloff in bank stocks.

"Banks' interest income is expected to get squeezed because of the tax breaks for housing transactions," TX Investment's Wu Feng told Dow Jones Newswires.

The benchmark Shanghai Composite Index, which covers A and B shares, was down 20.26 points at 1,875.56 on turnover of 33.0 billion yuan (4.8 billion dollars).

The Shanghai A-share index fell 21.32 points, or 1.07 per cent, to 1,970.06 on turnover of 32.9 billion yuan, but the Shenzhen A-share index added 4.18 points, or 0.78 per cent, to 540.71 on turnover of 13.3 billion yuan.

Banks led the decline with Industrial and Commercial Bank of China down 2.8 per cent to 3.80 yuan.

China Merchants Bank shed 4.5 per cent to 13.49 yuan and China Construction Bank dropped 3.9 per cent to 4.0 yuan.

Resources continued to slump on growing recession fears and falling raw material prices.

Yunnan Copper slipped 2.6 per cent to 8.54 yuan after it reported an 88.9 per cent fall in the third-quarter net profit.

Aluminum Corp of China (Chalco) was down 1.32 per cent at 6.71 yuan.

PetroChina, the biggest index component, fell 5.0 per cent to 10.66 yuan and China Petroleum Chemical Corp (Sinopec) shed 2.9 per cent to 8.09 yuan.

China Railway Group dropped 5.9 per cent to 4.75 yuan after announcing losses of 1.94 billion yuan on H-share listing proceeds held in foreign currency.

China Railway Construction Corp was down 3.0 per cent at 8.14 yuan. It booked a 320 million yuan foreign exchange loss in the third quarter as a result of the yuan's appreciation.

Property developers were in demand with China Vanke, the country's top property developer by market value, up 4.4 per cent to 6.89 yuan. Poly Real Estate Group rose 6.4 per cent to 15.13 yuan.

The Shanghai B-share Index fell 0.56 points, or 0.54 per cent, to 102.80, while the Shenzhen B-share Index added 0.04 points, or 0.01 per cent, to 254.71.

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