Oct. 28 (Bloomberg) -- China's stocks fell for a third day, driving the benchmark CSI 300 Index to a two-year low, on concern a slowing economy will cut corporate profits.

China Life Insurance Co., the nation's biggest insurer, tumbled 9 percent as third-quarter earnings fell 70 percent on lower investment returns. China Vanke Co., the nation's largest property developer, plunged 9.2 percent, while rival Poly Real Estate Group Co. dropped 4.8 percent after third-quarter profit fell. Industrial & Commercial Bank of China Ltd. fell 7.6 percent after the smallest earnings increase since going public two years ago.

``Companies won't be able to sustain their profit growth as we go deeper into this slowdown,'' said Daphne Roth, Singapore- based head of equity research in Asia at ABN Amro Private Bank, with about $30 billion of Asian assets. ``Things are going to get worse before they get better.''

The CSI 300 Index, which tracks yuan-denominated stocks on the Shanghai and Shenzhen exchanges, declined 41.42, or 2.5 percent, to 1,613.25 at the 11:30 a.m. local-time break, poised for the lowest close since Nov. 21, 2006. About six stocks fell for each that advanced, with financial stocks contributing about half of the index's decline.

The index's 14-day relative strength index, showing how rapidly prices have advanced or dropped during the specified period, retreated to 27.9 yesterday. Some investors regard readings of less than 30 as a signal that stocks are poised to rise. The measure was valued at 11.6 times earnings yesterday, the lowest since it was created in April 2005.

Economic Slowdown

The CSI 300 has tumbled 73 percent from its peak on Oct. 16 last year, as growth in the world's fourth-largest economy cooled to 9 percent in the third quarter, the slowest pace in five years. Home prices had the smallest gain in at least three years in September, gaining 3.5 percent, according to government data. In the southern city of Shenzhen, prices for new homes plunged 10.8 percent.

China Life fell 9 percent to 17.45 yuan. Profit in the third quarter slumped 70 percent to 2.34 billion yuan, after the nation's stock market decline crimped investment returns.

China Vanke dropped 9.2 percent to 5.34 yuan, after third- quarter profit fell 13 percent to 215 million yuan amid a housing market ``recession.'' Property sales fell 32 percent to 11.5 billion yuan. Poly Real Estate Group Co., the nation's second-largest developer, sank 4.8 percent to 12.60 yuan, after reporting an 18 percent slump in third-quarter profit. China Merchants Property Development Co., based in Shenzhen, declined 5.7 percent 11.20 yuan.

Industrial & Commercial

Industrial & Commercial Bank fell 7.6 percent to 3.42 yuan, the most since Sept. 17, after profit for the third quarter rose 26 percent to 28.2 billion yuan. Earnings grew at less than half the pace of the first six months.

The Shanghai Composite Index, a measure of equities on the larger of the country's two exchanges, dropped 2.9 percent to 1,673.92. The Shenzhen Composite Index sank 2.1 percent to 463.13.

The following stocks also fell in China. Stock symbols are in parentheses after company names:

China Shipping Container Lines Co. (601866 CH), the nation's second-biggest cargo-box carrier, fell 0.04 yuan, or 1.5 percent, to 2.58. The company posted a third-quarter loss of 271.7 million yuan as the credit crunch curbed demand for Chinese-made furniture, toys and other goods in the U.S. and Europe. The company didn't give year-earlier figures as it only listed on the bourse in December.

Dongfang Electric Corp. (600875 CH), China's second-biggest power-equipment maker, dropped 1.01 yuan, or 5.3 percent, to 17.90. Third-quarter profit fell 60 percent to 317 million yuan from a year earlier, partly because of costs connected with the May 12 Sichuan earthquake.

Sansteel Minguang Co. (002110 CH), the listed unit of the largest steelmaker in China's Fujian province, tumbled 0.63 yuan, or 10 percent, to 5.68. Profit may fall as much as 80 percent this year because of lower prices and expensive raw-material stockpiles.

To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net

Last Updated: October 28, 2008 00:03 EDT