SHANGHAI - Most stocks on the Chinese mainland fell as commodity makers declined on concern slow global growth will sap demand for raw materials, countering gains by financial stocks on speculation the government will relax leading curbs.

Jiangxi Copper Co and Yunnan Aluminum Co dropped after the cost of insuring European government debt against default rose to a record. Industrial and Commercial Bank of China Ltd (ICBC) and China Life Insurance Co advanced for financial companies after the central bank lowered reserve-ratio requirements for some rural lenders.

"Europe's debt crisis is still worsening and that'll pressure local sentiment by scaring investors away from risk assets," said Zhang Ling, general manager at Shanghai River Fund Management Co. "China's policies are in the process of being loosened gradually, and there won't be further tightening. But an overall relaxation is still unlikely."

The Shanghai Composite Index rose 0.1 percent to 2397.55, erasing a 1 percent loss and gaining for the first time in seven days. The CSI 300 Index added 0.2 percent to 2588.92.

The Shanghai Composite has tumbled 15 percent this year, following last year's 14 percent plunge, after the central bank raised rates three times and lifted the reserve-requirement ratio to curb inflation that's near a three-year high.

ICBC, the nation's biggest listed lender, gained 0.9 percent to 4.28 yuan. China Life Insurance Co, the nation's biggest insurer, gained 3.3 percent to 17.84 yuan. China Vanke Co, the nation's biggest listed property developer, added 2.3 percent to 7.25 yuan.

The central bank is lowering reserve requirements for more than 20 rural cooperative banks by half a percentage point. The move reduces the percentage of deposits that the cooperatives are required to park with the central bank to 16 percent, a "normalization" after an increase a year ago, the People's Bank of China (PBOC) said on Wednesday.

Chances are increasing over the next two quarters for the PBOC to cut the reserve requirement ratio for all financial institutions amid tight liquidity conditions, the China Securities Journal said on Thursday, citing unidentified people.

A drop in a preliminary China purchasing managers' index on Wednesday may have been "exaggerated" by "negative sentiment" from falling property prices, Credit Suisse Group AG said. The reading of 48 reported by HSBC Holdings PLC and Markit Economics compared with a final number of 51 last month. A number below 50 indicates a contraction.

Internet companies Renren Inc and Shanda Games Ltd led declines for stocks traded in the United States on Wednesday on concern that profit growth will slow as they increase investment to fend off competition.

Bloomberg News

(China Daily 11/25/2011 page16)