Chinese shares drop 2.96 percent at midday

DECLINING blue chips dragged down Shanghai's key stock index in the morning session today on speculation new shares will dilute existing holdings and the central bank said it will continue to order banks to set aside more reserves.

The benchmark Shanghai Composite Index, which covers both A and B shares, fell 129.27 points to 4,241.02, after a 3.47 percent drop on Friday. The index opened at 4,500.39 at 9:30am today.

Losers in the Shanghai market outnumbered gainers 681 to 153 while 18 were unchanged.

The Shenzhen Composite Index, which covers the mainland's smaller stock market, dropped 2.14 percent, or 29.54 points, to 1,352.46.

The Shanghai A-share Index fell 135.82 points or 2.96 percent to 4,449.67 points and the Shenzhen A-share was down 31.24 points or 2.15 percent to 1,432.51.

(Agencies)