China stock index ends down 3.6 percent

SHANGHAI (Reuters) - China's main stock index ended down 3.6 percent on Monday at its lowest close in more than eight months, as already weak market sentiment took further blows from a tumble on Wall Street and a Chinese central bank warning of possible further monetary tightening.

The benchmark Shanghai Composite Index .SSEC finished at 3,820.048 points, its lowest close since July 6, 2007, when it ended at 3,781.348 points.

Industrial and Commercial Bank of China (601398.SS), one of the most active stocks, closed down 3.14 percent at 5.56 yuan.

"In the next two or three weeks, the index will seek technical support between 3,400 and 3,600, where it moved from early June to early July last year," said Chen Jinren, senior stock analyst at Huatai Securities.

"But in a bearish market anything can happen, so we are cautious not to say these levels are a firm floor for the index."

U.S. stocks tumbled on Friday after Bear Stearns BSC.N, the fifth-largest U.S. investment bank, shocked Wall Street by saying its cash position had unraveled in the previous 24 hours.

Adding to the negative mood for Chinese stocks, central bank governor Zhou Xiaochuan said in remarks published on Monday that China still had room to raise interest rates and banks' reserve requirements.

The market was already jittery about the possibility of a hard landing for China's economy after data last week showed rising inflation and a slowdown in export and loan growth in February.

Worries over the economy, plus huge fund-raising plans by large companies, including Ping An Insurance (601318.SS), have helped to knock 12 percent off the benchmark index this month.

Ping An tumbled 5.12 percent to 59.82 yuan on Monday, the first time the stock fell below 60 yuan since the early days after its listing in March last year.

CITIC SECURITIES RISES

Losing Shanghai shares overwhelmed gainers by 872 to 28, with more than 200 Shanghai A shares plunging by their 10 percent daily limit.

On China's smaller national bourse in Shenzhen, the composite index .SZSC tumbled 6.34 percent to 1,158.886, posting its biggest daily loss since January 28.

Turnover in Shanghai A shares remained thin at 73.3 billion yuan ($10.4 billion), although up from Friday's one-month low of 64.0 billion yuan.

CITIC Securities (600030.SS), China's top brokerage, bucked the market's downtrend with a gain of 0.88 percent to 58.50. It had risen more than 5 percent to 61.00 yuan in the afternoon after reporting that 2007 net profit soared five-fold.

The brokerage also distanced itself from an investment deal announced last October with Bear Stearns, saying on Saturday it might not proceed with the deal because of the U.S. investment bank's financial crisis. JPMorgan Chase & Co (JPM.N) subsequently said on Sunday that it would buy Bear Stearns.

CITIC Securities and Bear Stearns had announced plans to invest about $1 billion in each other and form a joint banking venture in Asia. CITIC Securities was to obtain a stake of about 6 percent in Bear Stearns, with the U.S. bank getting about 2 percent of the Chinese firm.

Chinese shares related to Tibet tumbled on Monday after unrest last week in the Tibetan capital, Lhasa, with tourism firm Tibet Shendi (600749.SS) plunging its 10 percent daily limit to 13.80 yuan.

Technology issue Tibet Galaxy 000752.SZ, trade firm Tibet Tianlu (600326.SS) and Tibet Pharmaceutical (600211.SS) also dived the 10 percent daily limit.

"Destabilising factors, including the overseas market, have already dampened sentiment, plus domestic matters like Tibet have increased concerns that corporate earnings will be hurt," said a stock analyst at a securities house in Shanghai.

China Shenhua Energy's (601088.SS) domestic A shares dropped 3.14 percent to 50.84 yuan, although they outperformed a more than 7 percent drop in its Hong Kong-listed- H shares (1088.HK), after it posted lower-than-expected 2007 earnings.

($1 = 7.08 yuan)

(Editing by Edmund Klamann)