June 19 (Bloomberg) -- China's stocks plunged, resuming a decline that's wiped out $1.2 trillion of market value, on renewed concerns the government will concentrate on measures to curb consumer prices rather than bolster equities.

Citic Securities Co., the nation's biggest publicly traded brokerage, and Ping An Insurance (Group) Co., the second-largest insurer, fell after People's Bank of China Governor Zhou Xiaochuan said tackling inflation is the country's top priority.

The CSI 300 Index lost 218.20, or 7.3 percent, to 2,773.08 at the close, retreating for the 11th day in 12. The measure jumped 5.2 percent yesterday on speculation the government would intervene to support the index, which is down 53 percent from its October peak.

``Yesterday's rebound was a one-off,'' said Zhang Shuntai, who oversees $2.9 billion at Zhonghai Fund Management Co. in Shanghai. ``The market is still trying to find the bottom. There's still concern earnings will be hit by government tightening measures.''

All 10 industry groups fell today and almost half the index's 300 members dropped by the 10 percent daily limit. The eight-month slump has erased more value than India's market capitalization.

Citic Securities fell by 10 percent to 23.64 yuan, extending its decline from the index's peak in October to 58 percent. Ping An lost 6.2 percent to 47.89 yuan. Aluminum Corp. of China Ltd., the nation's biggest maker of the lightweight metal, plunged 10 percent to 12.88 yuan. The stock, which rose threefold on its first day of trading on April 30 last year, has since slumped 30 percent.

Top Priority

Governor Zhou told reporters in the U.S. yesterday that ``tackling inflation remains the most important task,'' when asked if the central bank is concerned that weakening overseas demand may cut China's economic growth.

China's inflation climbed to 8.1 percent in the first five months of 2008 from 4.8 percent for all of 2007. To counter rising prices, the central bank has required lenders to set aside a record amount of money for reserves this year after raising interest rates six times in 2007.

The tightening measures ended a fivefold increase in the CSI 300 during the past two years that made Chinese stocks the most expensive among the world's largest equity markets.

Soaring corporate profits, economic growth at more than 10 percent and returns higher than the rate of inflation drew record investors during the rally. At the peak, 1.1 million new accounts for trading stocks were opened in the first week of September, when the CSI 300 was approaching its Oct. 16 high of 5,877.20.

Waning Interest

Investors created less than 180,000 new accounts in the first week of June, the most recent data provided by the China Securities Depository & Clearing Corp. shows, as investors shifted money into cash. Household deposits rose by 236.9 billion yuan ($34.3 billion) in May from the previous month, according to central bank data.

China Vanke Co., the nation's biggest listed property developer, tumbled 10 percent to 9.24 yuan, capping a 40 percent drop since April. China Minsheng Banking Corp., the nation's first privately owned bank, slid 9 percent to 5.65 yuan, the lowest since December 2006. Baoshan Iron & Steel Co., China's biggest steelmaker, dropped by the daily limit to 9.83 yuan.

China Petroleum & Chemical Corp., the country's largest oil refiner, also known as Sinopec, fell 3.4 percent to 12.57 yuan. PetroChina Co., the second-biggest refiner, retreated 5.7 percent to 15.17 yuan. More than $600 billion of PetroChina's market value has been erased since it became the world's first $1 trillion company in November.

Goldman, Sachs & Co. cut the target prices of the two companies' Hong Kong listings because of losses from turning oil into fuels.

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, fell 6.5 percent to 2,748.87. The Shenzhen Composite Index lost 7.4 percent to 780.56.

To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

Last Updated: June 19, 2008 06:08 EDT