Shanghai's key stock index declined in the morning session today led by airlines after oil prices hit new records above US$134 a barrel.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, lost 1.42 percent, or 50.48 points, to 3,493.71 points at 11:30am.

Turnover reached 50 billion yuan and losers in the Shanghai market outnumbered gainers 496 to 330 with 81 unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 1.08 percent, or 11.67 points, to 1,067.88.

China Eastern Airlines declined 3.93 percent to 10.01 yuan per share and Air China tumbled 3.99 percent to 12.99 yuan.

Oil prices surged US$5 to a record of more than US$134 a barrel yesterday after a US government report showed a surprise drop in crude stockpiles, reinvigorating fears of a supply crunch.

China Petroleum & Chemical Corp, known as Sinopec, and PetroChina Co fluctuated after the government quashed speculation that it would remove price caps on the country's oil refiners.

Sinopec dipped 0.64 percent to 12.47 yuan per share and PetroChina, the nation's biggest oil company, dropped 2.35 percent to 17.44 yuan.

The National Development and Reform Commission said on its Website yesterday that it's baseless to say the government will lift curbs on fuel prices as early as next month.

Industrial and Commercial Bank of China lost 1.65 percent to 5.97 yuan and Shanghai Pudong Development Bank dropped 3.6 percent to 27.55 yuan.

Suning Appliance Co dropped 0.85 percent to 52.25 yuan after the retailer said it would issue 54 million shares to raise 2.43 billion yuan for its outlet expansion.