Shanghai's key stock index fell in the morning session today, led by brokerages and airline carriers.

The Shanghai Composite Index declined 2.62 percent, or 63.29 points, to 2,350.08 at 3pm.

Losers in the Shanghai market outnumbered gainers 773 to 54 while two did not change.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 4.01 percent, or 26.98 points, to 646.47.

Brokerages lost on concerns lower turnover will slash income. Air China Ltd retreated to the lowest in 21 months on speculation the cost of paying overseas debt will rise as the yuan weakened the most in four weeks. Baoshan Iron & Steel Co led steelmakers lower after a newspaper said it will cut product prices in the fourth quarter.

Haitong Securities, the country's largest listed brokerage by market value, slumped 7.79 percent to 15.50 yuan (US$2.27). Citic Securities, the brokerage unit of China's biggest investment company, lost 4.32 percent to finish at 17.93 yuan while Hongyuan Securities dropped 5 percent to 12.54 yuan.

Air China, the nation's largest international carrier, slumped 7.86 percent to 5.63 yuan. China Southern Airlines Co, the nation's biggest carrier by fleet size, sank 7.18 percent to 5.17 yuan. China Eastern Airlines Corp, the nation's third-largest carrier by fleet size, lost 8.75 percent to 4.90 yuan.

China Eastern's passenger numbers dropped 11 percent in July, the fourth monthly decline, while Air China's fell 6.8 percent, according to data released this month by the two carriers, as restrictions put in place for the Beijing Olympics disrupted travel.

A weakening yuan boosts the value of airlines' dollar-denominated debts when converted into the local currency. China Southern made a full-year currency gain of 2.83 billion yuan in 2007. That was more than its 1.87 billion yuan net income. Air China made a gain of 2.03 billion yuan from the appreciation of the yuan last year.