SHANGHAI - Stocks on the Chinese mainland fell for a second day after the central bank raised interest rates for a third time this year to slow growth in the world's second-largest economy.

PetroChina Co and China Shenhua Energy Co fell more than 1 percent on concern demand for raw materials will decline. SAIC Motor Corp and Anhui Conch Cement Co paced a retreat by industrial companies as Credit Suisse Group AG said it expects a "bumpy landing" for China's economy.

Kweichow Moutai Co advanced on speculation consumer stocks might weather slowing economic growth.

"Concerns still linger that these tightening measures will lead to a 'hard landing' for the economy," said Zhang Ling, general manager at Shanghai River Fund Management Co. "It's uncertain where the economy is headed for now."

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, fell 16.21 points to close at 2794.27. The CSI 300 Index slid 0.4 percent to 3101.68.

The Shanghai index, which has lost 0.5 percent in 2011, trades at 12.8 times estimated earnings, compared with 11.2 for an MSCI measure of emerging-market shares, according to data compiled by Bloomberg.

China's one-year lending rate increased by 0.25 percentage point to 6.56 percent on Thursday, following a statement on the website of the People's Bank of China on Wednesday. The one-year deposit rate climbed 0.25 percentage point to 3.5 percent.

The central bank has raised reserve requirements for lenders 12 times and rates five times since the start of last year.

Credit Suisse expects a "bumpy landing" for the economy, with a 20 percent probability of a "hard landing" over the next 12 to 18 months, Dong Tao, an analyst at Credit Suisse, said in a report.

Monetary policy will remain on a "tightening bias" for the next 12 months, he said.

PetroChina fell 1.1 percent to 10.94 yuan ($1.69). Shenhua lost 1.2 percent to 30.70 yuan. Aluminum Corp of China Ltd, the listed unit of the nation's maker of the lightweight metal, retreated 2.3 percent to 10.85 yuan. Jiangxi Copper Co fell 2 percent to 36.43 yuan.

Global commodities fell on Wednesday on concern higher interest rates will slow growth and crimp demand for raw materials.

Crude oil for August delivery dropped 0.3 percent to settle at $96.65 a barrel in New York on Wednesday. The London Metal Exchange Index of prices for six metals including copper and aluminum slipped 0.3 percent.

Inflation accelerated to 6.2 percent in June, according to the median forecast in a Bloomberg News survey of economists before a report due next week. Consumer prices rose 5.5 percent in May, the most since July 2008, mainly driven by food costs. Consumer prices may climb 6.2 percent in June and 6 percent in July, the People's Daily said on Thursday, citing Ba Shusong, a researcher at the State Council's Development Research Center.

The central bank may raise rates once or twice again to curb inflation, he said, according to the paper.

SAIC slid 3 percent to 18.56 yuan. Anhui Conch Cement Co Ltd fell 2.5 percent to 27.72 yuan. China First Heavy Industries Co, a maker of equipment used in the mining and energy industries, lost 1.2 percent to 4.77 yuan.

China may reduce investment in seven strategic emerging industries, including high-speed rail and wind power, on concerns of corruption and overcapacity, Reuters reported on Thursday, citing two unidentified persons close to the Communist Party leadership.

A measure of 23 consumer-staples stocks climbed 0.9 percent on Thursday, the best performer among the CSI 300's 10 industry groups. Kweichow Moutai rose 1.6 percent to 194.11 yuan, the highest close since Nov 29. Wuliangye Yibin Co gained 1.8 percent to 37.15 yuan. The interest-rate increase may be the last for 2011, according to JPMorgan Chase & Co, HSBC Holdings Plc and Bank of America Merrill Lynch. Nomura Holdings Inc predicts one more move, this quarter.

The MSCI China Index will rally 20 percent over the next 12 months on increasing prospects for an easing of monetary policy by the central bank from the end of the third quarter, according to Deutsche Bank AG.

Bloomberg News