Shanghai stocks dropped yesterday, led by banks and brokerages after a report said the growth in profit for most listed companies slowed in the first half.

The benchmark Shanghai Composite Index buckled 2.62 percent, or 63.29 points, to close at 2,350.08 points.

Losers out-numbered gainers 822 to 57 while 28 stocks were unchanged. Turnover rose to 31.3 billion yuan (US$4.57 billion) from Monday's 27.5 billion yuan.

Listed companies have to submit their half-year earnings results by Saturday. A report by Shanghai Securities News said the growth in profits for most listed companies slowed in the first half, which suggested the overall economic situation was sluggish in the first six months. Most of the firms also reported a shrinkage in investment income, the report said.

"The low level of turnover these days suggests a lack of confidence in the markets, with investors still waiting for favorable news to stimulate the market,'' said Wu Jun, an analyst with China Galaxy Securities Research.

Haitong Securities fell 7.79 percent to 15.50 yuan, Sinolink Securities Co slid 8.63 percent to 30.28 yuan and Citic Securities Co Ltd lost 4.32 percent to 17.93 yuan.

Air China, the country's largest international carrier, slumped 7.86 percent to 5.63 yuan. China Eastern Airlines Corp, the nation's third-largest carrier by fleet size, plunged 8.75 percent to 4.9 yuan.

Banks erased Monday's gains. China Construction Bank dipped 0.19 percent to 5.31 yuan while Industrial and Commercial Bank of China lost 1.43 percent to 4.81 yuan. Bank of China fell 2.47 percent to 3.56 yuan.

PetroChina, the country's largest oil producer and the biggest component in the index, fell 1.76 percent to close at 13.37 yuan amid rumors it would float more A shares.

China Railway Construction Co Ltd skidded 3.9 percent to close at 9.11 yuan despite posting a 12-percent gain in first half profit against the same period last year.

Among gainers, Ping An Insurance (Group) Co, China's second-largest insurer, added 1.08 percent to 43.94 yuan. Shanghai AJ, which said its first half profit fell 75 percent from last year to 53.46 million yuan, surged to the 10 percent daily cap to close at 8.67 yuan.