SHANGAHI stocks fell to a four-month low today as investors sat on the sidelines ahead of the Labor Day holiday next week.

The key Shanghai Composite Index slumped 0.97 percent, or 21.39 points, to settle at 2,177.91 points, the lowest close since December 24. The index sank 2.59 percent for the month, extending losses to a third straight week.

Daily turnover shrank to 65.3 billion yuan (US$10.5 billion) from yesterday's 84.3 billion yuan.

"Risk aversion prevailed in the market as the holiday approached, and tumbling shares which were strong in early trading led investors to quit the market to secure their profits," Guosen Securities said today.

China's stock markets will close in the next five days for both weekend and Labor Day holidays.

Jing Ulrich, J.P. Morgan's managing director and chairman of China equities and commodities, said many investors took a wait-and-see stance as the key index stayed between 2,200 and 2,450 points in the past three months. The cautious sentiment is likely to continue after China posted lackluster first-quarter data.

China's economy expanded 7.7 percent in the first quarter, short of the market expectation of 8.2 percent.

Worries about China's real estate industry, which accounts for about 10 percent of the nation's overall economy and affects nearly 60 sectors, also discouraged overseas fund managers from investing in China's securities market, said Ulrich.

Bank of China, the country's third-largest lender, fell 1 percent to 2.87 yuan after reporting an 8.2 percent rise in first-quarter earnings, down from a 9.9 percent increase a year earlier. Bank of Communications Co, the fifth-biggest bank, dipped 0.4 percent to 4.63 yuan after reporting an 11.5 percent rise in first-quarter profit, compared with 19.6 percent a year earlier.

PetroChina, China's biggest oil and gas producer, skid 0.5 percent to 8.48 yuan after revealing its first-quarter profit slumped 8 percent. China Petroleum declined 0.7 percent to 6.73 yuan.