Beijing - China's main stock market fell by nearly 6 per cent in early trading on Thursday, following more big losses on Wall Street.

The key Shanghai Composite Index, which tracks shares traded in local and foreign currencies, closed the morning session at 1,816.44, down 5.84 per cent, state media said.

Shares in banking and insurance companies led the plunge, after reports that several major Chinese banks held bonds in the bankrupt US investment firm Lehman Brothers.

The Industrial and Commercial Bank of China held Lehman bonds valued at 152 million dollars, while the Bank of China and China Merchants Bank held bonds valued at 
76 million dollars and 70 million dollars, respectively, the official China Daily said.

All three banks lost heavily on Wednesday as Chinese stocks followed global losses with a 3-per-cent plunge, led by falls in banking and real-estate shares.

"Concern has grown that more domestic banks will be involved in the shock wave of the United States credit crisis," the Shanghai Daily newspaper on Wednesday quoted analyst Wang Fen of the Shanghai Securities Company as saying.

The Chinese banks also face new pressure from a cut in the base lending rates by the central bank, the newspaper said. (dpa)