Chinese stocks plunge amid falling inflation

BEIJING -- China's stocks closed sharply lower on Monday after statistical authorities announced in the morning that inflation last month fell to a 29-month low.

The benchmark Shanghai Composite Index tumbled 2.37 percent, or 52.77 points, to close at 2,170.81.

The Shenzhen Component Index fell 2 percent, or 193.48 points, to close at 9,496.68.

The National Bureau of Statistics announced earlier on Monday that the country's consumer price index, the main gauge of inflation, continued to drop. The index for June eased to 2.2 percent from 3 percent registered in May.

The declined in the two markets on Monday came after Premier Wen Jiabao said over the weekend that the government should "preset and fine-tune its policies in a more aggressive manner" as the economy still faces huge downward pressure.

Cement companies, coal producers, and securities firms led the decline, bank shares also depressing.

Xinjiang Qingsong Building Materials and Chemicals Co Ltd fell 4.61 percent to 11.39 yuan ($1.79) per share. Pingdingshan Tianan Coal Mining Co Ltd fell 6.71 percent to 9.32 yuan.

Sinolink Securities Co Ltd dipped 6.28 percent to close at 12.53 yuan while the China Merchants Bank Co Ltd declined 3.97 percent to 10.15 yuan.

On the two bourses, losers outnumbered gainers 858 to 100 in Shanghai and 1,310 to 162 in Shenzhen.