China stock index off 1.4 pct to new 14-month low

SHANGHAI (Reuters) - China's main stock index fell sharply on Thursday to a new 14-month low, dragged down by high inflation and tightening monetary policy, large supplies of fresh equity, and weak global markets.

The Shanghai Composite Index .SSEC slid 1.41 percent to 2,981.637 points after 45 minutes of trade, dropping below this year's previous low of 2,990.788, hit on April 22. Trade was extremely thin.

Banks remained among the biggest losers after a harsher-than-expected tightening of monetary policy last weekend. Industrial & Commercial Bank of China (601398.SS), the largest bank, was down 1.33 percent at 5.18 yuan.

Analysts see strong technical support for the index between the April low and 2,956 points, the 61.8 percent retracement of its bull run from mid-2005. But they believe a clean break of that support is possible if the government does not intervene soon to support the market.

"It is hard to identify a floor. The 3,000 point level would be a reasonable floor from the point of view of valuations, as China's economy hasn't changed fundamentally," said Zhou Lin, analyst at Huatai Securities.

"But sentiment is so fragile that the index might well break below 2,800, which would probably mean a drop to 2,500."

($1 = 6.90 yuan)

(Reporting by Claire Zhang; Editing by Andrew Torchia)