China shares fall on profit-taking

Chinese shares fell Tuesday as investors took profits amid fears the government might tighten credit and after the main market index hit a 13-month high a day earlier.

The benchmark Shanghai Composite Index declined by 53.71 points, or 1.6 percent, to close at 3,213.21. The Shenzhen Composite Index for China's smaller second exchange shed 2 percent to 1,081.94.

Investors were unnerved by a rumor that the record bank lending in the first half might prompt the government to tighten the easy credit policy that has helped to spur a market rally this year.

"The rumor triggered the sell-off," said Tang Yonggang, an analyst for Hongyuan Securities in Beijing.

Analysts said investors were unaffected by the announcement that China State Construction Engineering Corp. hoped to raise 50.1 billion yuan ($7.3 billion) in the country's biggest initial public offering this year. Tang said the new shares entering the market were unlikely to depress prices because sentiment is strong.

Nonferrous metal shares led declines after outperforming in previous sessions.

Aluminum Corp. of China retreated 3.2 percent to 16.04 yuan, while Tongling Nonferrous Metals Group. dived 4.8 percent to 23.20 yuan.

Baoshan Iron & Steel Co., China's biggest steel producer, lost 3.2 percent to 8.11 yuan, and Angang Steel Co. dropped 4 percent to 14.7 yuan.

Industrial & Commercial Bank of China Ltd., China's biggest commercial lender, fell 1.7 percent to 5.18 yuan and Bank of China Ltd. slipped 1.1 percent to 4.42 yuan.

Brokerages rose on hopes for more business from additional IPOs. Northeastern Securities vaulted 4 percent to 45.30 yuan, while Citic Securities Ltd. added 1.1 percent to 33.17 yuan.

In currency markets, the yuan strengthened to 6.8313 to the U.S. dollar, up from Monday's close of 6.8315.

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