SHANGHAI'S key stock index yesterday fell to a one-week low as concerns continued over the debt crisis in Europe and tighter monetary policies in China.

The Shanghai Composite Index dropped 1.1 percent to 2,471.31 points, the lowest close since September 6.

China's central bank said on Monday that the country will still prioritize stabilizing prices and continue its prudent stance on monetary policies after data showed inflation cooled and new yuan loans expanded in August.

Analysts said the central bank may increase the withdrawal of money from the economy through open market operations and a possible interest rate rise may occur this month or next.

Meanwhile, investors fear Europe's debt crisis may halt economic recovery and hurt China's exports. Greece is in danger of defaulting on its debt and rating agencies may downgrade French banks because of Greek bond holdings.

Metal producers led the decliners after base metal prices were depressed by a stronger US dollar and worsening US and European economies.

Jiangxi Copper Co, China's biggest producer of the metal, shed 1.9 percent to 30.75 yuan (US$4.81). Aluminium Corp of China lost 1.7 percent to 8.72 yuan. Baoshan Iron and Steel Co, China's largest listed steelmaker, edged down 0.8 percent to 5.15 yuan.

Source:shanghaidaily