A man watches a screen showing the stock index at a stock market in east China's Shanghai, Jan. 22, 2008. Chinese shares plunged more than seven percent on Tuesday amid panic selling over worries of a possible U.S. economic recession. The benchmark Shanghai Composite Index which covers both A and B shares tumbled 354.68 points, or 7.22 percent, to 4,559.75. The Shenzhen Component Index finished down 1,215.08 points, or 7.06 percent, at 15,995.85. (Xinhua Photo) Photo Gallery>>>

    BEIJING, Jan. 22 (Xinhua) -- Chinese shares plunged more than seven percent on Tuesday amid panic selling over worries of a possible U.S. economic recession.

     The benchmark Shanghai Composite Index, which covers both A and B shares, tumbled 354.68 points, or 7.22 percent, to 4,559.75. It was the largest percentage points decline in seven and a half months.

    The index plummeted as much as 8-plus percent in late afternoon trading.

    The Shenzhen Component Index finished down 1,215.08 points, or 7.06 percent, at 15,995.85.

    Losses led gains by 780 to 17 in Shanghai and 599 to 8 in Shenzhen. Aggregate turnover expanded to 232 billion yuan (31.8 billion U.S. dollars) from 199.8 billion yuan on Monday.

    "People are worrying that the worsening subprime crisis may cause a U.S. economy recession. This would reduce global demand of Chinese products," said Su Yanzhu, a fund manager with China Southern Fund Management Co. Ltd.

    Ping An Insurance plunged by the daily limit of 10 percent to 79.55 yuan. The country's second-largest life insurer said Sunday it planned to issue 1.2 billion A shares and no more than 41.2 billion yuan worth of convertible bonds.

    China Coal Energy, the nation's second-largest coal producer, planned to issue no more than 1.525 billion A shares on the Shanghai Stock Exchange.

    Banks fell sharply. Small-sized city commercial lender Bank of Ningbo plunged 9.16 percent to 16.95 yuan. Heavyweight ICBC lost 8.60 percent to 6.9 yuan and trading of BOC was suspended pending profit announcement.

    Oil, property, steel, and nonferrous metals also posted heavy losses.

    PetroChina, which accounts for about 25 percent of the Shanghai Composite Index, fell 4.73 percent to 26.18 yuan, the lowest closing since its record high of 48.62 yuan on its debut on Nov. 5. China Petroleum and Chemical Corp. (Sinopec) dropped 8.70 percent to 18.25 yuan.

    Hua Sheng, an industry analyst and president of Yan Jing Oversea Chinese University, said the drop was "normal and positive" because it helped squeeze out assets bubbles.

    Another analyst who declined to be named said he expected the downward trend to continue through August.