SHANGHAI'S key stock index fell this morning on concern corporate losses will increase from China's deadliest earthquake since 1976.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, lost 1.20 percent, or 43.25 points to 3,561.51 at 11:30am.

Dongfang Electric Co and Sichuan Hongda Chemical Industry Co, two companies in earthquake-hit Sichuan, both dropped the 10 percent daily limit. China Eastern Airlines Corp and Shanghai Airlines Co jumped on speculation the two will merge as air freight is now in strong demand.

The 8.0-magnitude earthquake that hit Sichuan on May 12 affected 14,207 industrial companies, the Ministry of Industry and Information said yesterday. These companies may have incurred combined losses of 67 billion yuan (US$9.57 billion), almost 0.5 percent of the country's gross domestic product last year.

Sichuan Hongda, the country's third-biggest zinc producer, plunged the 10 percent daily cap to 32.68 yuan this morning as it resumed trading today after a five-day halt. The company said the earthquake caused a loss of 387.7 million yuan and that 74 employees were killed as of yesterday.

Dongfang Electric, the country's second-biggest maker of power equipment, tumbled 10 percent to 36.33 yuan. Its shares fell 10 percent yesterday. The company said on May 15 that the earthquake ``seriously damaged'' plants that contributed about 20 percent of its operating revenue last year.

China Eastern, the nation's third-largest carrier by fleet size, jumped 6.96 percent to 10.76 yuan. Shanghai Airlines, the city's second-biggest carrier, surged 4.26 percent to 8.32 yuan.