BEIJING, May 7 -- Shanghai's key stock market dropped this morning as financial shares and electricity producers declined.

    The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, shed 1.11 percent, or 41.55 points, to 3,691.95 at 11:30am.

    Losers in the Shanghai market outnumbered gainers 610 to 179 while 12 were unchanged.

    The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 1.19 percent, or 13.33 points, to 1,109.31.

    Industrial and Commercial Bank of China, the nation's biggest lender, lost 1.54 percent to 6.39 yuan (92 US cents). Shanghai Pudong Development Bank Co, part owned by Citigroup Inc, plunged 4.64 percent to 30.18 yuan.

    ICBC, the world's largest bank by market value, will open a US$50-million unit in Dubai, adding to its emerging-market holdings in Asia and South Africa.

    The bank won the "final license'' from United Arab Emirates Dubai Financial Services Authority on April 28, Beijing-based ICBC said in a statement to the Shanghai stock exchange today. The subsidiary will accept deposits, provide credit, manage assets and arrange deals in investments.

    The bank now has more than 110 branches in 13 countries and regions worldwide. ICBC has also applied to open branches in New York and Australia.

    Pudong bank's morning stumble came after it said 412.5 million of yuan-denominated shares will become tradable next week as a two-year lockup period expires.

    Pudong Bank's two largest shareholders will be allowed to sell part of their holdings, representing 7.3 percent of total outstanding shares, from May 12, the Shanghai-based bank said in a statement to the city's stock exchange today. Pudong Bank still has 6.5 billion non-tradable shares.

    Shares of Pudong Bank have dropped 22 percent this year, triggered by the collapse of China's equity market bubble and the prospect of an additional share offering that may raise as much as 20 billion yuan.

    Pudong Bank is aiming for a 50 percent increase in profit to 10 billion yuan in 2008, Chairman Fu Jianhua told shareholders in March. Reaching that target will depend on the bank's ability to sell new shares, he said.

    Airlines suffered another tough morning due to surging crude oil prices in the world market.

    Air China, the nation's biggest carrier by market value, lost 3.30 percent to 14.95 yuan. China Southern Airlines, the biggest in fleet size, was down 2.88 percent to 12.80 yuan while China Eastern Airlines, the third largest in fleet size, buckled 3.19 percent to 10.94 yuan.

    Oil shot to a record above US$122 a barrel yesterday in the United States on supply worries and the weak US dollar, extending a rally that has doubled prices over the past year and has some experts forecasting a potential spike to US$200.

    China Datang Corp was among losing electricity producers after decreasing 3.46 percent to 13.69 yuan this morning. China's five biggest state-owned power producers posted losses in the first quarter because of rising fuel costs, the Shanghai Securities News said, citing company officials.

    The five utilities have asked the state to raise electricity prices to help them cope with increasing coal costs, the newspaper reported.

    China Huadian Corp lost 813 million yuan in the first quarter as coal costs rose as much as 70 yuan a ton, the newspaper reported, citing Deputy Sales Director Wang Xinan.

    China Power Investment Corp's coal costs rose 1.45 billion yuan after it boosted electricity output 11 percent in the first four months of this year, it reported, citing Zhao Fengyun, deputy director for operations at the utility.

    China Datang Corp's coal stockpile dropped to 5.12 million tons at the end of March, or about 9.1 days' consumption, the newspaper cited the utility's marketing director Fang Xiaoshuai as saying. China Huaneng Group Corp and China Guodian Corp are the remaining state-owned electricity producers.

    (Source: Shanghai Daily)