China stocks still worst perfomers

Banks and property shares weakened,driving markets down.

China’s key stock index closed down 0.5 percent on Friday,with sluggish overseas markets and uncertainty over potential domestic policy decisions this weekend weakening investor sentiment.

The Shanghai Composite Index ended the day at 2,696.6 points,up 0.3 percent for the week and paring gains from Thursday when the index rebounded to close up 2.1 percent.

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The index has been one of the worst performers in Asia this year,tumbling 18 percent to date on fears that Beijing may resort to more aggressive monetary policy tightening.

Analysts said investors were apprehensive of further tightening measures after Shanghai’s municipal government said it was putting up the city’s most extensive land sale ever,as it moves to curb housing prices by increasing available supply.

Yesterday’s rebound let the index recover slightly but uncertainty over whether there will be further tightening measures to be announced this weekend is dampening sentiment,said Zheng Weigang,a senior trader at Shanghai Securities.

Zheng added that a fall in U.S. stocks on Thursday was also a factor hurting A-shares.

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Banks and property stocks were the biggest fallers with Shanghai’s property sub-index down 1.8 percent.

However,gaining Shanghai stocks slightly outnumbered losers 437 to 434,indicating investors were selling large-cap companies.

Turnover in Shanghai A shares fell to 82 billion yuan ($12 billion) from Thursday’s 90 billion yuan.

The Shanghai index’s 14-day relative strength index was at 30 points,a level that indicates the threshold for whether a market has become oversold. Earlier in the week the index plumbed to a record low of 19,not seen since the Lehman Brothers crisis in 2008.