SHANGHAI'S key stock index yesterday fell to the lowest level in a week after China's industrial data revealed a slow expansion in manufacturing.

The Shanghai Composite Index fell 0.4 percent to 2,556.04 points, the lowest level since August 24.

China's Purchasing Managers' Index, a comprehensive gauge of manufacturing activities across the country, rebounded slightly to 50.9 percent in August from a 29-month low of 50.7 percent in July, the China Federation of Logistics and Purchasing said yesterday.

Zhang Liqun, an analyst with the federation, said the index's slight rebound was a sign that the Chinese economy is stabilizing.

But he noted that a sub-index for new export orders fell significantly, which signalled that exports may not grow strongly.

He also warned of rising costs and a possible slowdown in investment in property and consumption.

"The slowdown of China's economy is controllable and we expect monetary policies will remain tight," said Li Miaoxian, an analyst at BoCom International.

Meanwhile, Premier Wen Jiabao's remarks in the official Qiushi magazine yesterday that China must step up measures to control inflation and especially home prices in smaller cities in the second half of the year hit property developers.

Hainan Zhenghe Industrial Group Co slid 4.5 percent to 7.16 yuan (US$1.12). Shanghai AJ Corp lost 1.4 percent to close at 8.93 yuan.

Source:shanghaidaily