China stocks down on loan worries

Bank loans have helped to drive the Chinese market rally

China's main share index has fallen after a three-day winning streak, as fears grow about possible bad bank loans and a reduction in liquidity.

Premier Wen Jiabao said China would keep interest rates low as the economy faces new difficulties.

He also said Beijing would make sure there was enough available credit to support growth.

The benchmark Shanghai Composite Index fell 77.63 points, or 2.6%, to end the day at 2,915.80.

Bad loan worries

It had fallen as much as 5.5% in mid-afternoon trade before recovering. The Shenzhen Composite Index at China's smaller, second exchange fell 2.3% to 975.53.

The falls came a day after shares had risen strongly across Asia following positive comments about the US economy from Federal Reserve boss Ben Bernanke.

However, there are worries that an increase in bank lending, which has helped to drive the Chinese market rally, might see a rise in bad loans.

"With the high bank lending in the first half year, interim results of banks reflected concerns of bad loans," said Dai Shuang, an analyst for United Securities in Shenzhen.