SHANGHAI stocks yesterday fell for the first time in five days, snapping a four-day winning run, on concerns that rising inflation may limit room for easing policies and on weaker producer prices.

The Shanghai Composite Index lost 0.59 percent to 2,232.97 points.

China's Consumer Price Index, a main gauge of inflation, rose 2.4 percent from a year earlier in April, faster than the 2.1 percent gain in March, the National Bureau of Statistics said yesterday.

Yu Qiumei, the bureau's senior statistician, said the rising inflation was largely due to an 11.2 percent gain in vegetable prices from a year earlier.

Meanwhile the Producer Price Index, a major gauge of inflation at the wholesale level, fell 2.6 percent year on year to a six-month low in April, the bureau said.

"A pick-up in CPI indicated there is not much room for easing monetary policies and expectations for another interest rate cut has diminished," said Lin Caiyi, a senior economist at Guotai Junan Securities.

"Despite the impact of declining international commodity prices, a weaker-than-expected PPI suggested domestic demand is weakening amid a slowing economy," Lin said.

The National Development and Reform Commission may cancel operating permits for the coal industry to simplify the administration process, 21st Century Business Herald reported, citing unnamed sources close to China's top economic planner.

Coal producers fell on worries the move will result in stiffer market competition. Shanxi Lu'an Environmental Energy Development Co lost 3.9 percent to 15.79 yuan (US$2.57). Wintime Energy Co declined 4.4 percent to close at 8.19 yuan.