Shanghai's key stock index dropped the most since July 16 as shares slumped across the board. Airlines and oil refiners led the decline.

The Shanghai Composite Index lost 2.15 percent, or 60.95 points, to 2,775.72 at 3pm.

Losers in the Shanghai market outnumbered gainers 754 to 62 while six did not change.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 2.92 percent, or 24.93 points, to 827.59.

The Shanghai index has dropped 2,482.16 points, or 46.1 percent in the first six months this year, making it one of the worst-performing markets in the world. Investors are concerned rising fuel prices and accelerating inflation will hurt earnings.

In July, the market stabilized somewhat as the index gained 141.12 points, or 5.22 percent.

China Petroleum & Chemical Corp, also known as Sinopec, and Air China, the nation's largest international carrier, were among stocks that fell after crude oil had the biggest gain in three weeks.

Sinopec slumped 5.25 percent to 11.20 yuan (US$1.64). Sinopec Shanghai Petrochemical Co, China's largest maker of ethylene, fell 4.49 percent to 6.59 yuan.

Crude oil gained 3.8 percent to settle at US$126.77 a barrel in New York yesterday, the biggest advance since July 10 and the highest close since July 22. A US Energy Department report showed gasoline inventories declined for the first time in five weeks. Prices are up 75 percent from a year ago.

In China, government controls on gasoline, diesel and jet fuel prices have restricted the ability of refiners to pass rising crude oil costs on to customers. The country is unlikely to increase fuel prices before the Beijing Olympics next week, said Jiang Jiemin, chairman of PetroChina Co, in Beijing today.

Air China dropped 5.48 percent to 10.01 yuan. China Southern Airlines Co, the nation's biggest carrier by fleet size, lost 5.17 percent to 7.89 yuan.