CHINA'S securities watchdog has warned listed state-owned enterprises against trading speculatively in the futures market as it acts to contain risks amid volatility in the global commodity markets.

The SOEs can only use futures contracts as a hedging tool and must strictly control risks, Jiang Yang, assistant chairman of the China Securities Regulatory Commission, said in a Website statement yesterday. "China is highly reliant on imports of raw materials, but their prices are determined by overseas futures prices."

However, the United States subprime crisis triggered volatility in futures prices and companies faced higher risks. So hedging in overseas futures market plays an important role in helping companies keep risks at bay and also helps them control costs while they aim to be profitable, Jiang said.

"The risks are manageable as long as we adhere to the principle of hedging," he noted.

Crude oil, copper, palm oil and rubber fell yesterday on concern sales will plummet.