Chinese shares close down in morning session

BEIJING, Feb. 26 (Xinhua) -- Chinese shares closed 0.43 percent down on Tuesday morning from a sharply higher opening after an overnight call from the securities regulator relieved investors' panic over a refinancing wave.

The benchmark Shanghai Composite Index opened 2.62 percent higher but closed at 4174.38 points on Tuesday morning, 18.15 points lower than the previous close. The Shenzhen Component Index opened 2.59 percent higher and closed at 15148.31, 338.36 points, or 2.18 percent lower.

The China Securities Regulatory Commission issued a statement on Monday evening, urging listed firms to "carefully" consider investors' demand when making refinancing plans by share offering.

Analysts say the watchdog's move, together with companies' dismissal of refinancing rumors, renewed investor confidence.

Banks and insurers have recovered from previous downturns on Tuesday morning, with Shanghai Pudong Development Bank jumping 3.28 percent and China Life rising 3.72 percent.

However, financing demand still far exceeds fund supply and tight liquidity will make it difficult to drive prices up by a big margin without more policies to balance the supply and demand on the market, said Zhang Lei, an analyst with the Qilu Securities.

Huge refinancing plans by companies including Ping An Insurance and Shanghai Pudong Development Bank had dampened investor sentiment and triggered panic selling, with shares in Shanghai tumbling 4.07 percent on Monday amid market guess of refinancing by China Unicom.

China Unicom, the country's second-largest mobile operator, denied a 60-billion-yuan share offering plan after its shares on the A-share market plunged 9.98 percent to 10.92 yuan on Monday.

China Life, another company plagued by refinancing talk, said on Monday afternoon the news of its 200-billion-yuan share offering plan was mere hearsay. Strong quakes destroys scores of houses in Indonesia's Sumatra

Shares of Ping An Insurance had dropped 33.4 percent by Monday since it announced on Jan. 21 the issue of an additional 1.2 billion A shares and up to 41.2 billion yuan worth of convertible bonds.

The insurer had noticed the stock watchdog's call and will carefully consider the timing and size of its refinancing while taking into account investor demand, said a company spokesman on Monday.

"The market is in correction from previous bullish runs and will surely regain momentum later," said Jiang Baoquan, an investment consultant with the China fund.