SHANGHAI stocks retreated this morning amid concerns over China's economic outlook and tight liquidity at the end of May.

The key Shanghai Composite Index shed 6.78 points, or 0.29 percent, to 2,317.23. Turnover was 57 billion yuan (US$9.3 billion) by midday.

The Organization for Economic Cooperation and Development (OECD) yesterday joined the International Monetary Fund to lower its 2013 China growth forecast to 7.8 percent, down from an earlier estimate of 8.5 percent, due to weak demand and uncertainties in the global economy.

The IMF yesterday slashed its prediction for China's 2013 economic growth to 7.75 percent from 8 percent, citing weaker global demand.

The market also slumped on a month-end liquidity crunch. The seven-day repurchase rate, a gauge of interbank funding availability, gained 47.40 basis points to 4.14 percent as of 11:30am today in Shanghai as banks are gathering cash to meet month-end requirements.

Distilleries led the decliners. Kweichow Moutai Co, a leading producer of high-end liquor in China, lost 0.8 percent to 199.78 yuan. Shanxi Xinghuacun Fen Wine Factory Co fell 3 percent to 28.72 yuan.

Steelmakers tumbled. Fushun Special Steel Co slipped 1.7 percent to 5.72 yuan. Xining Special Steel Co decreased 1.7 percent to 4.65 yuan. Inner Mongolia BaoTou Steel Union Co shed 0.6 percent to 4.90 yuan.