(Xinhua)
Updated: 2008-02-20 17:31

Chinese shares fell on Wednesday, losing most of their gains from the previous day, with the indices driven down by selling of heavyweights - banks in particular. But food companies' shares rose in reaction to inflation figures that showed surging food prices.

Analysts said that talk of a possible secondary offering estimated at 40 billion yuan ($5.6 billion) by the Pudong Development Bank added pressure to tightened liquidity and dampened investor sentiment.

Special Coverage: Markets Watch   Related readings:  New funds could bring $11bn into equities  Pudong Bank plans $5.6b share sale  Chinese share prices open slightly lower

Pudong, a mid-sized commercial bank, dived by the 10 percent daily limit to 45.98 yuan. Other mid-sized commercial banks also fell. For instance, China Merchants Bank dived 5.67 percent to 32.94 yuan.

The benchmark Shanghai Composite Index closed at 4,567.03, down 97.27 points, or 2.09 percent. The Shenzhen Component Index lost 322.40 points, or 1.87 percent, to 16,959.20 points.

The Industrial and Commercial Bank of China, the nation's biggest commercial bank, dropped 3.16 percent to 6.75 yuan.

China Life, the country's largest life insurer, went down 2.15 percent to 40.89 yuan, and China Ping An, another leading life insurer, slid 3.17 percent to 74.44 percent.

In contrast, food producers' stocks gained as investors reacted to the news that consumer prices had risen sharply. The consumer price index for January, released on Tuesday, showed that inflation had hit an 11-year high of 7.1 percent. The National Bureau of Statistics said that the year-on-year rise was driven significantly by food prices.

On Wednesday, food shares as Nanning Sugar Industry, Guitang Ltd and First Food rose, gaining 10 percent, 7,75 percent and 3.53 percent, respectively, to 26.18 yuan, 17.24 yuan and 26.36 yuan.

Combined turnover increased further to 176.66 billion yuan from 157.18 billion yuan on the previous day.

Losers outnumbered gainers by 610 to 229 in Shanghai and by 467 to 179 in Shenzhen.