Shanghai's key stock index fell in the morning session as cautious investors looked to avoid risk in a volatile market.

The Shanghai Composite Index dropped 0.68 percent, or 12.80 points, to 1,862.76 points. Losers outnumbered gainers 690 to 161 while 27 remained unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic market, was down 0.34 percent, or 1.73 points, to 512.84 points.

Industrial and financial companies dragged the index down on concern global turmoil may hurt company profits.

China Railway Group Ltd., Asia's biggest construction company, sank 2.74 percent to 4.62 yuan after it booked a 1.94 billion yuan (US$283 million) loss on currency bets yesterday.

China Merchants Bank Co., the nation's fifth-largest lender by market value lost 4.82 percent to 12.84 yuan. Shanghai Pudong Development Bank Co., part owned by Citigroup Inc, lost 3.25 percent to 12.49 yuan. Bank of Communications Co. dropped 3.67 percent to 4.72 yuan.

Aluminum advanced for the first time in four days, as producers cut output and after crude prices rallied.

Aluminum Corp. of China Ltd., China's biggest producer, said this week it will slash annual production capacity by 18 percent and may consider further cuts. Its shares rose 0.30 percent to 6.73 yuan.

The metal for January delivery on the Shanghai Futures Exchange climbed 535 yuan, or 4 percent, from the previous settlement price, to 13,950 yuan (US$2,040) a metric ton, and stood at 13,790 yuan at 10:50am.

Aluminum traded little changed at US$2,010 a ton on the London Metal Exchange, heading for its sixth weekly decline. The metal is down 8.8 percent this week. Elsewhere, Poly Real Estate lost 1.45 percent to 14.91 yuan. Gemdale Corp., a Chinese developer that partnered with ING Groep NV, eased 1.90 percent to 6.20 yuan. PetroChina gained 0.84 percent to 10.75 yuan. Sinopec was off 1.24 percent to 7.99 yuan at the end of the morning session.

(Shanghai Daily October 24, 2008)