Shanghai's composite index dipped 0.82 to 1,499.82. Shenzhen's shares gained 7.18 to 3,051.22.

Shanghai's B-share index inched down 0.52 percent to 127.274 points while Shenzhen's tiptoed 0.26 percent higher to 209.30.

Analysts said punters were content to stay on the sidelines ahead of the holidays, with the stock markets close today and not reopening until February 10.

"A holiday mood has set in and most punters adopted a wait-and-see attitude," said Shanghai Securities analyst Zhang Jun.

Analysts said punters began to cash in gains in large capitalized stocks such as China United Telecommunications Corp and CITIC Securities on worries that more firms would launch IPOs after the break, sapping liquidity.

In December, a securities source said Chinese lender Huaxia Bank had obtained approval to launch a 5 billion yuan (US$600 million) domestic initial public offering (IPO).

"Fear of new share issues led some investors to decide to cash out of heavyweight stocks before the holiday," said Huatai Securities analyst Chen Huiqing.

China Unicom, an arm of the country's second-largest cellular carrier, was the most active A share in Shanghai with 59.3 million shares changing hands. It ended the session down 0.6 percent at 3.23 yuan (US$0.39).

CITIC Securities, the first domestic brokerage to launch an IPO, closed 1.8 percent down at 6.91 yuan (US$0.83). It has surged more than 40 percent since January 7.

Shanghai Chlor Alkali Chemical Co was the biggest B-share decliner in Shanghai with a fall of 1.47 percent to US$0.538.

COSCO Shipping Co was the top A-share gainer in Shanghai, climbing 6.52 percent to 9.97 yuan (US$1.2).

The firm said yesterday it paid US$3.9 million for two ships designed to transport vehicles, expanding the scope of its shipping business.

On the foreign exchange market in Shanghai, the Chinese yuan ended flat at a strong 8.2767 against the US dollar in active trade, which the exchange hopes to boost by announcing extended hours from next week.

The yuan moved narrowly between 8.2766 and 8.2768 as an ample supply of dollars from robust exports kept the Chinese currency near the strong end of the trading range of 8.2760 and 8.2800 enforced by the central People's Bank of China.

The Shanghai-based market said on its Web site www.chinamoney.com.cn it would extend the trading day by about four-and-a-half hours from February 8, the first day of trade after the lunar new year break.

When the market reopens, daily sessions will last from 9:30 am to 3:30 pm with no midday break. Trade is now conducted from 9:20 am to 11:00 am.

"The prolonged trading hours will help boost activity on the market as banks and firms will be able to balance their positions throughout the day," said a dealer at a major Chinese bank.

"In the longer term, higher volumes will also help China's reforms to allow the yuan to move in a wider trading range, although the reforms will be gradual," he said.

Dealers said the yuan would remain at the firmer end of the government-set trading range ahead of the long holiday.

The yuan is not fully convertible on the capital account and the central bank keeps it within a 40-notch trading range.

Dealers said the exchange's decision to extend trading time was necessary following a surge in turnover.

Exchange figures showed turnover on the market, set up in 1994, was a record US$97.19 billion in 2002, with a daily average of US$390 million.

Since the start of 2003, average daily turnover has surged to more than US$600 million, dealers estimated. Turnover yesterday was US$760 million, compared with Tuesday's US$770 million.

(China Daily January 30, 2003)