SHANGHAI'S key stock index slipped this morning, following a near 5.3 percent drop last Friday.

The Shanghai Composite Index lost 1.18 percent, or 32.51 points, to 2,715.92 at 11:30am. The index is comprised of yuan-denominated A shares and hard-currency B shares.

Losers in the Shanghai market outnumbered gainers 552 to 197 while 24 were unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 1.28 percent, or 10.16 points, to 785.70.

Blue chips across the board face heavy selling pressure this morning.

China Merchants Bank dived 5.24 percent to 23.34 yuan (US$3.39) while Shanghai Airlines Co sank 7.02 percent to 5.43 yuan.

China Petroleum & Chemical Corp, known as Sinopec, the country's biggest oil refiner, lost 2.82 percent to 9.98 yuan after Friday's 9.12 percent fall. PetroChina, the nation's largest oil producer and the biggest stock by market capitalization, fell 0.67 percent to 14.90 yuan.

PetroChina Co may import record volumes of oil products this year and will extend a halt in exports to increase domestic supplies of gasoline and diesel, parent China National Petroleum Corp said on Friday.

Baoshan Iron & Steel Co, the country's largest steel maker, retreated 1.46 percent to 8.80 yuan. Baoshan Iron, the parent of Baoshan Iron & Steell, aims to raise sales to more than US$50 billion and profit to more than US$5 billion by the year 2012, the company said on Saturday.

Wuhan Iron & Steel Group, China's fifth-biggest steel maker, was also among falling steel makers this morning. It buckled 1.92 percent to 9.70 yuan. The company received US$169 million in loans from an overseas banking group to purchase iron ore, Shanghai Securities News reported today.

Shanghai's key index has fallen more than 48 percent this year on concern official measures to control inflation will hurt earnings growth. The central bank has ordered lenders to set aside a record amount of money in reserve after raising interest rates six times last year.

Profit growth at industrial companies slowed to 20.9 percent in the first five months this year from 42.1 percent a year earlier, the National Bureau of Statistics said on Friday.

Consumer prices rose 7.7 percent in May, down from April's 8.5 percent pace, which was the fastest in almost 12 years. Central bank Governor Zhou Xiaochuan last week said his bank may formulate "stronger policies" to tackle price increases.(Shanghai Daily)