China has picked Baoshan Iron and Steel Co. Ltd. and Three Gorges Dam operator Yangtze Electric Power Co. Ltd. to be among 42 firms propelling China's efforts to sell $200 billion of state shares.

The country's top steel mill, the operator of the world's largest hydroelectric dam and top listed broker CITIC Securities will anchor a second batch of companies in accelerating the programme, the securities regulator said in a statement seen on Monday.

"The pilot programme for the first batch of firms to sell down their government holdings is basically complete. The second group broadens the industry scope of the programme, and is more representative," the China Securities Regulatory Commission (CSRC) said.

The other 39 firms present a broad spectrum of the country's industries, from shipping to consumer electronics to pharmaceuticals, and join four firms hand-picked in April to kick off the market-wide sell-off.

Regulators revived an attempt in April to sell non-traded state shares -- the legacy of a centrally planned economy that comprises two-thirds of market capitalisation and hence had weighed on bourses for years -- to finance a patchy welfare system and enhance transparency.

Beijing's initial choice of four small firms to pilot the programme, spurred concern that major firms would be off-limits. Putting the largest holdings up for sale should signal that Beijing is willing to go the distance to end the stock overhang.

China is now picking its way gingerly through its latest version of a reform that triggered panic in markets the last time it was essayed in 2001, but which regulators deem crucial to boost corporate profitability and create a viable stock market.

But share prices have headed south since early May as investors fretted over a potential deluge of paper.

The benchmark index had dived about 15 percent so far this year, matching in less than six months a slide in 2004 -- triggered by corruption scandals and economic cooling measures -- that made it the world's worst-performing major index.

Among the firms hand-picked for the second round of share sell-down are Suning Appliance , Sinochem International Corp. , the listed arm of state oil trader Sinochem, and the world's top container maker, Shanghai Container Co. Ltd. .

Editor: Yan