SHANGHAI - Stocks on the Chinese mainland fell the most in seven weeks on concern that Europe's debt crisis could spread and higher-than-estimated new loans and money supply could make it difficult for China's government to ease its tightening policies.

Jiangxi Copper Co and China Shenhua Energy Co, the nation's biggest producers of copper and coal, slumped at least 3 percent on speculation demand for commodities will falter. Poly Real Estate Group Co, the nation's second-largest developer by market capitalization, retreated the most in three months after the Xinhua News Agency reported Shanghai will start a trial to cap prices of newly built low-income housing.

"The European debt problem will boost concerns about liquidity in global markets as well as China's exports to the region," said Larry Wan, Beijing-based head of investment at Union Life Asset Management Co, which manages the equivalent of $2.2 billion.

"For the third quarter, I am cautious about stocks as there's no indication of when economic growth will pick up again."

The Shanghai Composite Index slid 48.11 points, or 1.7 percent, to 2754.58, the biggest decline since May 23. The CSI 300 Index fell 1.8 percent to 3056.91.

New loans were 633.9 billion yuan ($98 billion), compared with the 622.5 billion yuan median estimate in a Bloomberg News survey of economists. M2, the broadest measure of money supply, rose by a larger-than-forecast 15.9 percent and foreign-exchange reserves climbed to $3.2 trillion. The People's Bank of China, the central bank, said on Tuesday.

"This suggests more tightening on the horizon," said Joe Lau, a Hong Kong-based economist at Societe Generale SA. "This may be more likely through further reserve ratio hikes."

Industrial & Commercial Bank of China Ltd, the nation's biggest listed lender, lost 0.9 percent to 4.29 yuan. China Construction Bank Corp, the second-largest, fell 1 percent to 4.77 yuan. Bank of China Ltd, the third-biggest, dropped 1.3 percent to 3.09 yuan.

Poly Real Estate dropped 3.8 percent to 10.83 yuan, the most since April 20. China Vanke Co, the biggest listed developer, slid 2.9 percent to 8.50 yuan. China Merchants Property Development Co lost 1.7 percent to 18.44 yuan.

Chinese inflation is being driven by property price increases, which will be key to controlling consumer prices, Yi Xianrong, a researcher at the Chinese Academy of Social Sciences, wrote in a commentary in the Hong Kong Economic Times.

Jiangxi Copper fell 3 percent to 34.88 yuan. Shenhua lost 3.7 percent to 29.76 yuan. PetroChina Co, the nation's biggest oil company, slid 1.5 percent to 10.72 yuan.

In Hong Kong, the Hang Seng Index fell 2.8 percent after Moody's Investors Service said some Chinese companies are engaging in potentially risky business practices.

Bloomberg News