Shanghai's key stock index suffered a second major blow this week as it dived more than four percent at one point this morning before recovering some ground at the break.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, slid 3.55 percent, or 155.44 points, to 4,227.95.

Losers in the Shanghai market outnumbered gainers 813 to 11 while 13 were unchanged.

The Shanghai index tumbled 7.19 percent to a six-month low on Monday.

The Shenzhen Composite Index, which covers the smaller mainland stock market, lost 5.23 percent, or 68.52 points, to 1,242.77.

PetroChina, the country's biggest oil producer and a key heavyweight in the market, slumped 4.23 percent, or 1.07 yuan (15 US cents), to finish the session at 24.20 yuan.

China Petroleum & Chemical Corp, Asia's biggest oil refiner, also known as Sinopec, shed 3.42 percent, or 0.58 yuan, to 16.38 yuan. The company said today that it won regulatory approval to issue bonds with warrants amounting to 30 billion yuan.

Jiangxi Copper Co followed the slide among metal producers this morning.

Jiangxi Copper, China's second-biggest producer of the metal will shut down 43 percent of its smelting capacity because snowstorms led to power shortages and stalled transportation, Reuters reported, citing unidentified people. The shares lost 6.11 percent, or 2.69 yuan, to 41.32 yuan.

Huludao Zinc Industry Co, China's second-largest zinc producer, fell 9.29 percent, or 1.17 yuan, to 11.42 yuan. Aluminum Corp of China Ltd, also called Chalco and the nation's biggest maker of the lightweight metal, slipped 4.84 percent, or 1.46 yuan, to 28.70 yuan.

The price of zinc jumped the most since April, leading a surge in metals prices on concern power shortages in China and South Africa will reduce supplies. Aluminum rose to the highest in almost six months. Zinc surged seven percent in London yesterday, the biggest one-day increase since April 4, and aluminum touched the highest since August 3.

But China Coal Energy Co, the nation's second-largest coal producer, surged as much as 48 percent on its Shanghai trading debut after investors ordered close to 120 times the stock.

The shares rose as high as 24.89 yuan and jumped 28.46 percent, or 4.79 yuan, to finish the early session at 21.62 yuan. The Beijing-based company sold 25.7 billion yuan of shares at 16.83 yuan each in the world's biggest stock sale this year so far.

Benchmark coal prices have risen to a record because of surging demand in China and supply disruptions in Australia and South Africa. China uses coal to produce four-fifths of its electricity. Investors ordered about 3.1 trillion yuan of China Coal's Shanghai shares, undeterred by a stock market that has retreated about 13 percent this year.

China Coal competes with bigger rival China Shenhua Energy Co, which raised 66.6 billion yuan in its Shanghai share sale last year. Shenhua almost doubled on its first day of trading on October 9. President Hu Jintao yesterday called on coal miners to boost supplies as China battles the fallout from the worst snowstorms in more than 50 years.

Chian Coal is the first stock going for initial public offering this year. Tumbling equity markets prompted 25 companies last month to halt plans for initial public offerings, the most in at least a decade.

China Coal first traded in Hong Kong on December 19, 2006, and the shares have since surged more than four times, making it the third-best performing stock on the 48-member MSCI Asia Pacific Energy Index in the past year. Shenhua is the eighth best-performing stock.

(Shanghai Daily February 1, 2008)