SHANGHAI stocks ended lower yesterday after three straight days of gains as dismal data indicated a tepid growth in China's non-manufacturing sector.

The Shanghai Composite Index lost 0.61 percent to 1,994.27 points.

The official non-manufacturing Business Activity Index, a gauge of the vitality of China's service industry, fell in June to a nine-month low of 53.9, down 0.4 point from May, the China Federation of Logistics and Purchasing reported yesterday. A reading of 50 or higher indicates growing activity.

Cai Jin, the CFLP's vice chairman, blamed the drop to slower growth in the construction industry due to seasonal factors while demand for housing remained weak with new orders contracting for a third consecutive month.

Poly Real Estate, China's second-largest listed developer, dropped 2.1 percent to 9.66 yuan (US$1.57). Gemdale Corp slid 3.1 percent to 6.65 yuan.

Meanwhile, the HSBC China Services Business Activity Index, slanted toward private and export-oriented service companies, edged up to 51.3 in June from May's 51.2, signaling a weak pace in China's non-manufacturing sector, which accounts for nearly half of the country's economy.

"China's economy is showing signs of a slowdown after the recent liquidity crunch while the government is likely to refrain from stimulus (measures) due to inflation risk," BOC International said in a report.

The Industrial and Commercial Bank of China, the nation's largest lender, lost 2 percent to 3.94 yuan. The Industrial Bank fell 1.3 percent to 9.02 yuan.