(Xinhua)
Updated: 2008-02-21 19:17

BEIJING - Chinese shares extended their losses for a second day on Thursday, as concerns lingered about increasing pressure on liquidity from large secondary offerings. But steel companies bucked the trend as investors focused on a positive outlook for the sector.

Analysts said that worries persisted about a possible secondary offering estimated at 40 billion yuan (US$5.6 billion) by Pudong Development Bank. These lingering concerns dampened investor confidence.

Pudong, a mid-sized commercial bank that dived by the 10 percent daily limit the previous day, plummeted 5.98 percent to 43.23 yuan on Thursday. Other mid-sized commercial banks also fell. For instance, Huaxia Bank went down 3.75 percent to 17.19 yuan and China Merchants Bank slid 2.25 percent to 32.20 yuan.

Early selling of heavyweights, banks in particular, drove the major index in Shanghai to more than 100 points below the 4,500-mark in the morning session. However, sentiment turned on the strength of a good performance on the Hong Kong stock exchange.

Hong Kong stocks rose 340.47 points, or 1.44 percent, to close Thursday's morning session at 23,931.05.

The benchmark Shanghai Composite Index closed at 4,527.18, down 39.85 points, or 0.87 percent. The Shenzhen Component Index lost 154.94 points, or 0.91 percent, to 16,804.26 points.

Expectations of a reliable performance buoyed steel stocks. Baosteel, China's largest steel company, gained 4.07 percent to 18.41 yuan, while Wuhan Steel went up 3.15 percent to 22.26 yuan and Tangshan Steel was up 4.5 percent to 23 yuan.

China's largest oil producer, PetroChina, which accounts for about 25 percent of the Shanghai index, lost 0.37 percent to 24.02 yuan, while the country's biggest oil refiner, Sinopec, fell 4.43 percent to 17.90 yuan.

The Industrial and Commercial Bank of China, the nation's biggest commercial bank, went down 1.93 percent to 6.62 yuan, and China Life, the nation's largest life insurer, down 2.20 percent to 39.99 yuan.

Gainers outnumbered losers by 535 to 295 in Shanghai and by 417 to 232 in Shenzhen.

Combined turnover decreased to 153.07 billion yuan on Thursday from 176.66 billion yuan on the previous day.