SHANGHAI'S key stock index dropped in the morning session on concerns that monetary policies will remain tight despite possible ease of inflationary pressure in August.

The benchmark Shanghai Composite Index fell 1.3 percent to 2,523.3 points. Turnover dipped to 31 billion yuan (US$4.8 billion) from yesterday morning's 31.4 billion yuan.

Yao Jingyuan, a former chief economist of China's top statistics bureau, said that inflation in August may slow down from July but curbing prices will remain priority for Chinese government.

Analysts from firms including BOCOM International and China International Capital Corporation estimated that consumer price index for August will range between 6.0 to 6.3 percent, lower than 6.5 percent in July.

Property developers extended previous losses after new housing sales in Beijing dropped to the lowest in three years while Shanghai has gone through the worst August in seven years. Poly Real Estate Co dropped 3.2 percent to 10.69 yuan. China Merchants Property Development Co fell 2.1 percent to 18.68 yuan.

Power generators declined after China Electricity Council said that thermal business of five major power firms in China has made a combined loss of 18 billion yuan from January to July. Yunnan Wenshan Electric Power Co shed 3 percent to 10.07 yuan. Guangxi Guiguan Electric Power Co lost 2.4 percent to 4.82 yuan.

Source:shanghaidaily