Chinese shares edged slightly lower on Wednesday, as the Shanghai Composite Index fell 0.90 percent. Finance stocks led the decline.

The benchmark index, which covers both A and B shares on the Shanghai Stock Exchange, closed 40.10 points lower at 4,417.85. It traded between 4,330.70 and 4,554.34 on the day.

The decline wiped away the rebound of 0.87 percent on Tuesday. The index plunged 7.19 percent on Monday, nearly matching the 7.22 percent, the largest percentage point loss in 7.5 months, on Jan. 22.

The Shenzhen Component Index slipped 78.22 points, or 0.48 percent, to 16,127.71.

Gains led losses by 475 to 354 in Shanghai and by 446 to 207 in Shenzhen. Aggregate turnover remained light, though it expanded to 138.6 billion yuan (19.3 billion U.S. dollars) from 118.9 billion yuan in the previous session.

The overnight Wall Street rally gave a boost to Chinese stocks in early morning trading, but financial stocks dragged down the index, according to Beijing Shoufang Investment Consulting. It added the weakness also came as investors remained cautious ahead of the upcoming Lunar New Year holiday.

China Life, the nation's largest life insurer, plunged 6.06 percent to 39.23 yuan after reports of lower-than-expected earnings last year. It forecast on Wednesday that 2007 net profits had risen more than 50 percent, compared with rival Ping An Insurance's more than 100 percent profit surge. Ping An Insurance shed 1.90 percent to 71.10 yuan.

Industrial Bank plummeted eight percent to 41.49 yuan after it said 3.28 billion of its A shares would be tradable on Feb. 5 after a one-year lock-up period.

Heavyweights Industrial and Commercial Bank of China slumped 2.86 percent to 6.46 yuan and China Construction Bank fell 2.11 percent to 7.89 yuan.

Other blue chips were mixed. PetroChina, which accounts for one quarter of the Shanghai Composite Index, gained 1.03 percent to 24.45 yuan. China Petroleum and Chemical Corp. (Sinopec) edged up 0.23 percent to 17.22 yuan.

Baoshan Iron and Steel was down 0.07 percent to 15.10 yuan and China Vanke dropped 1.65 percent to 25.60 yuan.

Agricultural stocks cushioned the slump. Xinjiang Korla Pear Co. jumped to the 10 percent daily limit to 12.60 yuan and Cofco Xinjiang Tunhe Co. rose 6.07 percent to 27.26 yuan.

Other major Asian markets also fell. Hong Kong's benchmark Hang Seng Index fell 2.63 percent to 23,653.69 and Tokyo's Nikkei 225 dropped 0.99 percent to 13,345.03 amid caution ahead of the U.S. Federal Reserve's decision on a possible interest rate cut.

(Xinhua News Agency January 31, 2008)