Shares of Air China Ltd, the country's largest international airline, dropped by almost 2 percent on its first day of trading in Shanghai because of the concern that rising fuel costs will erode earnings.

Air China's stock fell by as much as 0.06 yuan (0.75 US cents) to 2.74 yuan, becoming the first stock to drop below the offer price since China allowed domestic share sales to resume in May, Bloomberg said today.

The stock changed hands at 2.80 yuan as of 11:29am local time. Air China, which reduced its domestic share sales by 39 percent last week after institutions bid for barely one third of the stock, was also the first company to cut its share offering, reflecting investors' concerns over the stock's growth potential.