Chinese stocks slipped 0.50 percent on Friday in shrinking turnover, with coal and non-ferrous metal shares weak as worries mounted about the strength of the economic recovery and high share valuations.

The Shanghai Composite Index ended at 2,597.601 points and was down 1.8 percent for the week, posting its first weekly drop in four weeks.

But gaining Shanghai A shares outnumbered gainers by 471 to 393.

Turnover in Shanghai A shares slipped to its lowest level so far in May at 98.8 billion yuan ($14.5 billion), compared with Thursday's 138.4 billion yuan.

"The index is just taking a breather after hitting a new high (for the year) this week," said CITIC-Kington Securities analyst Qiang Xiangjing.

He added that the uptrend remained intact given ample liquidity in the financial markets, and expected the index to edge up next week or after a four-day holiday the following weekend.

China's stock market will be closed next Thursday and Friday.

Some analysts added that the index could find support at the 20-day moving average, now at 2,574 points.

Coal industry leader China Shenhua Energy lost 2.06 percent to 26.09 yuan, while Western Mining sagged 2.62 percent to 14.10 yuan.

Analysts said that, after the market's sharp run-up in recent months to its highest levels since last August, stretching valuations of many shares, investors were turning cautious in their response to positive news and were steadily taking profits ahead of next week's holiday weekend.

Worries about the economic recovery have also weighed on sentiment amid signs that manufacturing and exports remain weak.

Clean energy shares outperformed on Friday, with Shenzhen Topraysolar Co, a maker of solar power cells, jumping 5.26 percent to 29.42 yuan.

The official Securities Times reported that Chinese vice premier Li Keqiang pledged to promote the development of clean energy and environmental protection industries.

China's wind power leader, Goldwind Science and Technology, advanced 1.41 percent to 33.90 yuan after saying it had won six contracts worth a combined total of 4.19 billion yuan, equivalent to 64.86 percent of the company's 2008 sales under domestic accounting standards.

Home appliance manufacturer Haier climbed 4.20 percent to 11.91 yuan after saying its key shareholders had increased their stakes in the company and would buy more shares over the next 12 months.

Copyright Reuters, 2009

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