Beijing  - Mainland China's two stock markets plummeted by about 7 per cent Monday, as analysts blamed weak investor sentiment and concerns over decreasing loans.

The key Shanghai Composite Index, which tracks shares traded in local and foreign currencies, closed at 2,667.74, down 6.74 per cent and taking its total losses in August to almost 22 per cent.

The smaller Shenzhen Composite Index also lost 7.14 per cent of its value on Monday, ending the day down 69.59 points at 904.70.

The Shanghai Daily newspaper quoted a research note from Ping An Securities as saying that investor confidence could be hit by a likely fall in new loans from domestic banks to below 300 billion yuan (43.9 billion dollars) this month, down from from 356 billion yuan in July.

Profits for 1,637 listed companies in Shanghai and Shenzhen fell 14.8 per cent year-on-year in the first half of 2009, while the operating revenue of the same firms dropped by 11.8 per cent, the newspaper said.

"The market will remain weak with a lack of technical support and macroeconomic policy to stimulate the index," it quoted Everbright Securities as saying.

The official Xinhua news agency quoted Zhang Yunpeng, an analyst with Beijing-based Huarong Securities, as saying Monday's plunge was also influenced by an initial public offering in Shanghai from the Metallurgical Corporation of China (MCC).

State-owned MCC on Monday announced the issue next month of up to 3.5 billion shares valued at up to 16.85 billion yuan (2.5 billion dollars), the agency said.

State oil giants and real-estate firms were among the biggest losers on Monday. (dpa)