The benchmark Shanghai composite index, grouping hard currency B shares for foreign investors and yuan-denominated A shares, finished 0.49 percent lower at 1,521.414 points after a 3 percent run-up since the start of July, while the Shenzhen sub-index gained 1.65 points, or 0.05 percent to close at 3378.69.

"Investors are more cautious during the interim reporting season," said analyst Luo Yanxin at China Southern Securities.

The Shanghai composite index should hover around the 1,520-point level in the near term, he added.

More than 1,200 listed firms are required to post results from now until August 31, but most will report in August.

Top Software Co was yesterday's biggest A-share decliner, sliding 5.3 percent to 8.60 yuan. It forecast yesterday an earnings drop of more than 50 percent in the first half of 2003 compared with a year earlier.

Drug and medical equipment maker Benelux topped the B-share decliners' list with a 4.26 percent slide to HK$7.20, after it had also forecast a plunge of more than 50 percent in interim earnings.

The market enjoyed a mild rally in July as domestic investors bought into potential targets under a landmark Qualified Foreign Institutional Investors (QFII) scheme, which admits foreigners into the main US$500 billion stock and debt markets.

Swiss bank UBS AG on Wednesday executed the first trades under the watershed reform, buying into four companies.

Yesterday, shares in Shanghai Container, one of UBS' selections, closed down 0.66 percent at 13.58 yuan (US$1.64) but those in another of UBS' picks, telecommunications gear maker ZTE, rose 0.88 percent to 19.48 yuan (US$2.35).

"The market rally triggered by the first QFII investment lost steam because of concerns over corporate interim results," said analyst Zhu Chaoan at Eagle Securities.

Shanghai's A-share index closed down 0.49 percent at 1,593.397 points, while its Shenzhen counterpart was 0.38 percent lower at 436.26.

China's yuan ended one notch firmer at 8.2771 against the US dollar yesterday, keeping its strength within the managed trading range.

The yuan was sandwiched between 8.2770 and 8.2772 throughout the session, near the firm end of a razor-thin trading range of 8.2760 to 8.2800 that the central People's Bank of China usually enforces.

Turnovers rose to a strong US$720 million from US$630 million on Friday.

Healthy trade surpluses and foreign investment have kept the yuan at the upper end of its band over the past two years.

Dealers said China was exploring ways to make its rigid foreign exchange regime more flexible, but was unlikely to go through with a revaluation this year despite pressure from countries like South Korea, Japan and the United States.

Yesterday, the yuan weakened to 7.0270 against 100 Japanese yen from 7.0142 on Friday and solidified versus the euro to 9.3267 from 9.3708. It closed unchanged against the Hong Kong dollar at 1.0609.

In the futures market, Shanghai copper futures climbed by yesterday's close with some contracts ending at intra-day highs, inspired by buying on the London Metal Exchange that emerged in afternoon trade, traders said.

The most active November 2003 contract closed at a day's high of 17,560 yuan (US$2,121) per ton, up 120 yuan (US$14.49) from a day earlier.

Other contracts ended from 80 yuan (US$9.66) to 130 yuan (US$15.70) higher with combined volume falling to a thin 46,180 lots from Friday's 63,936 lots.

"The Chinese market got a boost from the LME as buying emerged in the afternoon due to fund purchases," said a trader in Shanghai.

"Some investors are also watching to see if the London contract can get past the US$1,740 barrier," he said.

(China Daily July 15, 2003)