Shares fall as finance chief squashes stimulus hopes

Stock markets in Shanghai and Shenzhen took a dive Thursday as investors anticipating government stimulus support to revive the sputtering economy were disappointed.

The Shanghai Composite Index lost 21.53 points, or 1.05 percent, to finish at 2,023.4; while the Shenzhen Component Index shed 159.53 points, or 1.98 percent, to close at 7,904.27.

Combined trading volume settled at 178 billion yuan ($28.97 billion), down from Wednesday's 202 billion yuan.

Both indices opened lower Thursday but managed to narrow early losses as the midday break approached. Things took a turn for the worse again in afternoon trading though as sell-off pressures escalated. Despite strong showings from media and electronic information stocks, drops in heavily weighted financial sectors proved too powerful to overcome.

Market confidence hit the skids after investors saw statements posted Wednesday which revealed that China's minister of finance, Lou Jiwei, had downplayed the possibility of a large scale stimulus package at the fifth US-China Strategic and Economic Dialogue in Washington on July 11. After a recent string of macro indicators pointed to a deepening slowdown in the domestic economy, many had been expecting the government to interject with measures to reignite growth.

Coal stocks took some of the biggest tumbles, declining by an average of over 2 percent, after the Ministry of Finance also announced that it may reform the country's resource taxes, a move which analysts say could increase the tax loan on the coal industry. Shanxi Coal International Energy Group Co shaved off 4.57 percent to 11.08 yuan. Datong Coal Industry Co slipped 4 percent to 6 yuan.