Chinese stocks tumble 5 percent

Investors worry about huge issue of bonds set to hit the market and flood of initial public offerings.

July 5 2007: 4:04 AM EDT

SHANGHAI (Reuters) -- China's main stock index closed down more than 5 percent on Thursday, hit by a rising number of new share issues and the government's plan to issue 1.55 trillion yuan ($200 billion) in special treasury bonds.

The Shanghai Composite Index ended down a provisional 5.25 percent at 3,615.872 points, continuing a steady decline over the past two weeks which analysts said heralded a medium-term correction.

"With huge stock and bond supplies pouring into the market, the liquidity-driven bull run seen last year and earlier this year is over," said analyst Cao Xuefeng at West China Securities.