SHANGHAI'S key stock index dropped for a seventh-straight day today and closed below the 3,000 point mark amid concern that more measures will be taken to curb inflation.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, lost 2.21 percent, or 66.71 points, to 2,957.53 at 3pm.

Losers in the Shanghai market outnumbered gainers 521 to 268 while 11 were unchanged.

The Shanghai index has slid since the central bank ordered lenders to set aside record reserves to curb inflation last Saturday.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 1.33 percent, or 12.04 points, to 891.

Shares continued to fall even after the National Bureau of Statistics announced that the country's inflation rate rose at a slower pace of 7.7 percent last month.

The consumer price index, the main gauge of inflation, increased 7.7 percent last month year on year, following jumps of 8.5 percent in April and 8.3 in March.

The index jumped to a near 12-year high of 8.7 percent in February.

But investors are concerned that slower inflation growth may be just a one-off blip and that the CPI is not likely to see sustained drops.

Securities shares were among stocks losing ground today amid concerns that a falling market will hurt earnings.

Citic Securities Co, China's biggest publicly traded brokerage, sank 7.27 percent to 29.84 yuan (US$4.31) while Hongyuan Securities lost 8.41 percent to 20.06 yuan.

China Merchants Bank Co, the nation's biggest dual-currency credit-card issuer, fell 2.90 percent to 23.40 yuan. China Merchants said it plans to sell as much as 30 billion yuan of subordinated bonds to raise capital.

Shanghai Pudong Development Bank, the Chinese partner of US-based Citigroup Inc, lost 2.43 percent to 24.13 yuan.