The Shanghai Stock Exchange has suspended trading in shares of Bank of China, China's second biggest bank, saying the bank had failed to comment on an "important event".

The move comes after Bank of China stock tumbled on Monday after reports that the bank might post a 2007 loss because of a big write-down on billions of dollars of US sub-prime mortgage related investments.

"Bank of China failed to make a statement on an important event so trading in its shares will be suspended for all day on January 22," the Shanghai exchange said on its website on Tuesday without elaborating.

 

A subsequent statement from Bank of China released later on Tuesday said its board was "not aware of any reasons" for the recent sharp declines in its share price.

 

The Bank of China's Shanghai-listed local-currency A shares were suspended but its Hong Kong-listed H shares continued trading on Tuesday, falling 8.6 per cent by midday.

 

Meanwhile unease over Chinese exposure to the US sub-prime crisis hit shares in other mainland banks, with financial stocks leading falls on the Shanghai market on Tuesday.

 

By midday, Industrial and Commercial Bank of China had slipped 4.8 per cent, Communications Bank fell 2.9 per cent and China Construction Bank Corp. lost 4.6 per cent.

Analysts said the market had expected Bank of China to comment on the reports of heavy losses due to its exposure to US sub-prime lending.

 

Hong Kong's South China Morning Post said on Monday that Chinese banking regulators had warned the country's government that Bank of China and two other state banks would make provisions for all their assets hit by US mortgage defaults.

 

The report heightened concerns about China's exposure to the sub-prime crisis, which has hammered earnings of major European and Wall Street banks, prompting steep drops in share prices around the world.

 

Bank of China says its sub-prime related assets were worth $7.95bn at the end of September last year.

 

Chinese officials are increasingly voicing concern about the fallout of the US sub-prime crisis, backing away from earlier confident declarations that the country was largely insulated.

 

On Monday the semi-official China Business News reported that a government task force recently made an assessment of the potential impact of the sub-prime crisis on Chinese banks, with "not very positive" conclusions.