SHARES in Shanghai tumbled yesterday from a sharp jump a day earlier, as bargain hunters dumped their holdings after a reported stimulus plan was not confirmed by the central government.

The Shanghai Composite Index lost 3.63 percent to 2,431.72. Turnover dropped by 12 percent to 51.9 billion yuan (US$7.58 billion) yesterday.

The Shenzhen Composite Index, which tracks the smaller domestic exchange, lost 3.35 percent to 688.95.

"Most stocks corrected after an unexpected jump (the day before)," said Qin Hong, an analyst at Bohai Investment Co. "The market speculation (of a stimulus plan) was not confirmed by the government, driving funds out of the market and damping investor confidence."

A day earlier, the Shanghai barometer soared 7.63 percent, the biggest gain since April 24, after JPMorgan Chase & Co said the government is considering spending as much as 400 billion yuan to stimulate the economy.

Financial shares led the decline yesterday on worries higher oil prices may stoke inflation and prompt a tighter lending.

Bank of Communications Ltd, part-owned by HSBC Holdings Plc, dropped 4.78 percent to 7.37 yuan. Industrial & Commercial Bank of China, the country's largest lender and second-biggest index stock, fell 2.86 percent to 4.76 yuan.

China Vanke, the country's largest property developer, shed 5.23 percent to 7.07 yuan while Sinopec lost 6.56 percent to 10.12 yuan.

Brokerages were sought after, with CITIC Securities Co, a unit of China's biggest investment company, adding 3.74 percent to 19.40 yuan.