SHANGHAI - Stocks on the Chinese mainland fell, driving the benchmark index to the lowest level in a week, after export orders slumped and Premier Wen Jiabao said the government won't alter economic policies amid concerns about inflation.

Baoshan Iron & Steel Co led a gauge of industrial stocks to the second-biggest drop among 10 industry groups after a gauge of export orders contracted for the first time in more than two years.

Liquor maker Kweichow Moutai Co slid the most in a week on speculation that gains were excessive after consumer staples stocks posted the only advance among industry groups in August.

"The government tone is that policy tightening will continue through the rest of the year," said Li Jun, a strategist at Central China Securities Co in Shanghai. "That'll hold back stock valuations."

The benchmark Shanghai Composite Index lost 11.30 points, or 0.44 percent, to 2556.04 on Thursday, the lowest since Aug 24. It dropped 5 percent in August, the biggest monthly loss since May. The CSI 300 slipped 0.43 percent to 2834.53 on Thursday.

A measure of industrial stocks dropped 0.9 percent. Baoshan Steel, the listed unit of China's second-biggest steel company, lost 0.4 percent to 5.27 yuan (83 US cents).

The purchasing managers' index (PMI) was at 50.9, compared with a 29-month low of 50.7 in July, the China Federation of Logistics and Purchasing said on Thursday. Another PMI index released by HSBC Holdings Plc and Markit Economics rose to 49.9 from 49.3.

The gauge of export orders in the federation's index contracted for the first time in more than two years, dropping to the lowest since March 2009, while the same measure in the HSBC index was below 50 for the fourth month.

Price pressures in China are still relatively large, Li Dongrong, assistant governor of the People's Bank of China, said on Thursday, citing factors including global liquidity, rising labor costs and pricing reforms on resource products.

Consumer prices rose 6.5 percent in July, the fastest pace in three years. The August inflation figure is due Sept 9. It probably slowed to 6.1 percent, according to a Bloomberg News survey of economists.

"We expect continued moderation in industrial activity in the coming months and see external weakness and uncertainties, as opposed to slowing domestic demand, posing a bigger downside risk to growth," Chang Jian and Yang Lingxiu, analysts at Barclays, said in a report.

Listed companies may report slower earnings growth in the third and fourth quarters of the year, CITIC Securities Co said.

Profits may grow 9.8 percent year-on-year in the third quarter and 8.8 percent in the fourth quarter, slowing from 23.8 percent growth in the first half, CITIC Securities analyst Chen Hualiang wrote in a report on Thursday.

Bloomberg News