China Key Stock Index Rebounds After Plunge

SHANGHAI (AP) — China's main stock measure edged up Tuesday as investors hunted bargains amid unease about possible government curbs on liquidity.

The benchmark Shanghai Composite Index inched up 15.98 points, or 0.6 percent, to close at 2,683.72. The Shenzhen Composite Index for China's smaller, second exchange slipped 0.5 percent to 900.53.

Shanghai's rebound was "merely a technical correction" after the benchmark plunged 6.7 percent Monday to its lowest level in three months on liquidity jitters, said Wen Lijun, an analyst for Nanjing Securities.

Investors were alarmed by news reports that Chinese bank lending fell about 40 percent from July's level, which was a sharp decline from June. The flood of lending to finance Beijing's stimulus has helped to push up stocks.

"The contraction of liquidity seemed to be more forceful than expected," Wen said.

A survey released Tuesday by a Chinese business group showed manufacturing improving in August but investors shrugged that off because the rise was expected, analysts said.