China Panzhihua group shares suspended on rumours

SHANGHAI, Aug 4 (Reuters) - The three listed companies in the Panzhihua steel group, one of western China's largest steel makers, said they were suspending trade in their shares after a spate of negative rumours about their planned merger.

In brief statements on Monday, PZH Steel (000629.SZ), Chongqing Titanium 000515.SZ and Sichuan Changcheng Special Steel 000569.SZ all said their shares would be suspended indefinitely while they investigated the rumours. They did not elaborate.

Shares in Chongqing Titanium and Changcheng Special Steel plunged their 10 percent daily limits on Friday, while PZH Steel sank 9.68 percent.

This brought the companies' share prices well below the prices at which they plan to conduct share placements and share swaps in a 7.19 billion yuan ($1.1 billion) deal that was announced in May.

The deal would more than double PZH Steel's total assets and create a listed company with 37.5 billion yuan in annual sales and 1.69 billion yuan of net profit.

The official China Securities Journal said on Monday that the shares were hit by speculation that weakness of the overall stock market might derail the merger, that the deal might not obtain final approval from the securities regulator, and that other steel makers might seek to buy some of the assets involved. ($1 = 6.84 yuan) (Reporting by Andrew Torchia; Editing by Edmund Klamann)