The mainland stock market tumbled 2.65 percent yesterday, led by real estate firms and banks, amid investors' mounting fears on China's economic growth and the government's possible continuation of tightening measures in the second half.

The benchmark Shanghai Composite Index fell 73.58 points to close at 2705.87, with 816 out of 912 stocks closing lower. The Shenzhen Component index slid 3.37 percent, or 325.63 points, to close at 9323.38. The turnover on the two bourses amounted to 95.81 billion yuan ($14.06 billion).

Cheng Weiqing, an analyst at CITIC Securities, said:"Investors are wondering about the government's next steps, as the first-half macro data is expected to be worse than they previously expected."

The National Bureau of Statistics is scheduled to announce the country's major macro data for the first half and June today.

In addition, the four official securities newspapers published articles this week suggesting the government should maintain the tightening measures. This comes before the central government is to hold the second-half economic conference, which will discuss the macroeconomic trend.

"More evidence of a slowdown may have reduced the likelihood of further tightening, but lingering inflation threats may prevent outright relaxation in monetary and administrative policies," Peng Cheng, an economist at Citi China, said in a report yesterday.

Peng said: "Policymakers have voiced concern over downside risks to the economy and could potentially reduce quantitative controls on credit, delay liberalization in pricing regimes, relax administrative controls for targeted industries and use fiscal means to offset economic weakness."

Zhu Haibin, an analyst at Essence Securities, said the government is faced with a policy dilemma on price control relaxation and the speeding up of renminbi appreciation. "Tightening monetary measures are expected to squeeze profits of banks and real estate," said Zhu.

Industrial Bank plunged 6.4 percent and Shenzhen Development Bank sunk 5.29 percent. Shares of Vanke A declined 4.77 percent, and Poly Real Estate slid 5.09 percent.

Bai Hongwei, an analyst at China International capital Corporation Limited, said real estate developers are expected to be under large capital tightening pressure at the end of 2008 and in the first quarter of 2009.

Editor: Yan