Stock futures now risky for China -official quoted

SHANGHAI, April 14 (Reuters) - China's stock market is not mature and the launch of stock index futures at this time would pose risks for the market, a senior regulatory official was quoted as saying in China's National Business Daily on Monday.

Stock index futures would allow short-selling in the market, while institutions would be able to manipulate the stock index simply by manipulating six index heavyweights, said An Qingsong, vice-head of the supervision department of the China Securities Regulatory Commission.

He thus urged careful consideration in proceeding with the launch of index futures.

"The securities market itself now needs to form a risk hedging mechanism," he was quoted as saying.

China has been preparing for well over a year to launch stock index futures, but worries about stock market volatility have contributed to delays, with many industry executives now saying they may not debut before late this year.

China's main stock index has tumbled more than 40 percent from its peak last October, and An blamed the slump partly on the U.S. subprime debt crisis and partly on the market's own problems, including its use by certain listed companies as a place to secure easy money.

China's domestic share market has been weighed down heavily by corporate fundraising plans including a multibillion dollar plan by Ping An Insurance (601318.SS)(2318.HK).

An gave potentially discouraging signals about the likelihood that the government would bolster the market, stating that China's market-oriented reforms have defined distinctive roles for the government and the market and that last year's bull run that pushed the index to 5,000 and 6,000 points was irrational.

The Shanghai Composite Index .SSEC tumbled in early trade on Monday. At 0245 GMT it was down 2.5 percent at 3,406.757, after falling more than 3 percent. (Reporting by Samuel Shen; Editing by Edmund Klamann)