SHANGHAI: Chinese share prices on Thursday plunged 5.42 percent, the sharpest percentage decline in two months, amid fears about the impact of massive amounts of shares released into the market, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, closed down 195.36 points at 3,411.49 on turnover of 76.9 billion yuan (10.9 billion dollars).

The Shanghai A-share Index was down 205.38 points or 5.43 percent at 3,578.92 on turnover of 76.7 billion yuan. The Shenzhen A-share Index lost 51.53 points or 4.25 percent to 1,161.67 on turnover of 34.9 billion yuan.

Insurers like Ping An Insurance and China Pacific Insurance were under heavy selling pressure due to the recent expiry of their lock-up periods.

China Pacific Insurance ended down 7.47 percent at 25.89 yuan after it tumbled 8.11 percent Wednesday to drop below the 30 yuan price of its initial public offering in Shanghai last December.

Around 300 million of its A shares became freely tradable on Wednesday as its lock-up period expired.

"The expiration of the lock-up period for shares will add to the selling pressure and dampen market sentiment, affecting other heavyweights like oil refiners and banks," said Liu Youcheng, an analyst at Hong Yuan Securities.

Analysts said China Pacific Insurance's fall heightened concerns that more blue chips could drop back to their IPO levels.

"Investors have hurried to sell stocks as they don't know when the market will reach the bottom," said Wang Sai, an analyst at Wanguo Consulting.

"Although the authorities have lately approved two more equity funds, it has failed to boost the market as investors worry fresh capital introduced by the funds will be much smaller than what entered when market peaked last year."

PetroChina, the biggest index component, tumbled 8.31 percent to 16.99 yuan, inching closer to its initial public offering price of 16.70 yuan.

"PetroChina's weaker-than-expected net profit report for 2007 led to a continuous slump for days," Hong Yuan Securities' Liu said.

China Coal Energy tumbled nearly 10 percent to 16.69 yuan at the close, below its IPO price of 16.83 in February.

Baoshan Iron Steel, the country's largest steel maker, lost 8.99 percent to 13.06 yuan, after announcing that its 2007 net profit fell 2.8 percent year-on-year to 12.7 billion yuan.

The Shanghai B-share Index was down 8.52 points or 3.26 percent to 252.89 on turnover of 202.81 million US dollars.

The Shenzhen B-share Index shed 11.67 points or 2.10 percent to 543.19 on turnover of 191.5 million Hong Kong dollars (27.4 million US dollars).


- AFP/so