The benchmark has gained 33.24 per cent this year.

The H-share index fell 0.51 per cent or 23.91 points to 4,615.11, after touching a six-year high on Monday.

Most of the trading yesterday was focused on China Life Insurance and Fujian Zijin Mining, with their combined turnover amounting to about $4.6 billion - almost one-third of the total.

'Turnover for most other shares died down ahead of the holidays,' an equity sales representative with a European brokerage said.

'With most institutional investors closing their books already, trading will mainly be supported by retail and corporate investors. Looking ahead, the market will become quiet after the Zijin IPO.'

Institutional investors continued to snap up China Life shares yesterday after it was admitted to the MSCI China index. The counter climbed 4.95 per cent to $5.30, extending its 9.78 per cent gain on Monday.

With China Life joining the MSCI, market watchers said fund managers were switching out of other mainland-related shares. Among the heavyweights China Mobile fell 2.51 per cent to $23.30 and Sinopec lost 1.63 per cent to $3.

PetroChina also slipped 1.27 per cent to $3.875. But HSBC Securities analyst Gordon Kwan remained upbeat on the stock given strong earnings growth expected next year, driven by higher oil prices.

'Both the fundamentals and liquidity favour a re-rating [for the counter],' Mr Kwan said.

Fujian Zijin bucked the downtrend on its debut, leaping 72.7 per cent to $5.70 from its initial public offer price of $3.30, making it the top gainer yesterday.

'Many institutional investors were selling the shares ... they were reaping more than 50 per cent debut gains,' the equity sales representative said.

But others were buying after Fujian Zijin said South African miner Gold Fields, the world's fourth-largest gold miner, had bought 1.4 per cent of the company and the two would form a joint venture.

Shanghai Industrial, the worst-performing blue chip yesterday, fell 4.4 per cent to $17.35 after its 17 per cent-owned associate Semiconductor Manufacturing International Corp (SMIC) was accused of patent infringement and misappropriation of trade secrets in a suit filed by rival Taiwan Semiconductor Manufacturing. Analysts speculate the suit is aimed at hindering SMIC's planned IPO.

China Unicom fell 1.39 per cent to $7.05, despite news that it plans to launch a dual-mode mobile service next year which would enable subscribers to access its GSM and CDMA networks in major mainland cities.

Hong Kong retail stocks fared well on hopes for a pick-up in domestic spending after the government announced a lower deflation rate for last month and rising tourist spending ahead of the holidays.

Casual-wear retail chain Giordano International rose 4.28 per cent to $3.65. Discount cosmetic retailer Sa Sa International climbed 6.25 per cent to $2.125, while watch retailer Oriental Watch gained 3.55 per cent to $1.75.

Esprit climbed 1.03 per cent to $24.45 after acquiring a Swiss-based distribution firm, allowing it to regain full control of its Swiss and Italian markets.

KEY FIGURES

Close: 12,420.51 (-67.48)

Turnover: $15.19 bln

Volume: 8.72 bln shares

Day's high: 12,545.04

Day's low: 12,416.01

Advanced: 372

Declined: 567

Unchanged: 516

December futures: 12,458 (-20)

January futures: 12,466 (-14)