2010-07-30 16:18

China's stocks dropped, paring the benchmark index's biggest monthly advance in a year, on concern recent gains were excessive relative to earnings prospects.

Yanzhou Coal Mining Co, the listed unit of China's fourth-biggest coal miner, slumped the most in a month after cutting its earnings growth forecast. Northeast Securities Co slid 1.2 percent after net income fell.

"This month's rebound by stocks is running ahead of economic fundamentals and it's still unknown if the government will relax tightening policies," said Wei Wei, an analyst at West China Securities Co in Shanghai.

"Disappointing earnings figures from some companies may lead to weak expectations about the second half of the year."

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, lost 10.61, or 0.4 percent, to 2,637.50 at the 3 pm close. The CSI 300 Index fell 0.3 percent to 2,868.85.

The Shenzhen Component Index on the Shenzhen Stock Exchange closed at 10,785.35 points Friday, down 53.56 points, or 0.49 percent, from the previous close.