SHANGHAI - Stocks on the Chinese mainland fell on Tuesday, dragging the benchmark index to a one-week low.

The setback came on concerns that the government might intensify policy tightening after imports jumped to a record and new lending increased.

The benchmark Shanghai Composite Index fell 26.45 points, or 1.1 percent, to 2471.31. The gauge, which sank 1.2 percent last week, settled at its lowest level since Sept 6. The CSI 300 Index sank 1.1 percent to 2720.28.

The Shanghai gauge has slumped 12 percent this year as the central bank raised interest rates five times and ordered lenders to set aside more cash as deposit reserves 12 times since the start of 2010 to contain inflation.

The stock gauge is valued at 11.4 times estimated profit, the lowest on record, according to daily data compiled by Bloomberg dating back to January 2006.

"Although there's a small risk of a hard landing for China's economy, a possible rebound in inflation and the impact of a worsening European debt crisis on the global economy still remain the biggest concerns to investors," said Wu Kan, a fund manager at Dazhong Insurance Co, which oversees $285 million. "There's also no sign that policies will be loosened in the short term. Stocks might test a new low."

Italian officials held talks with their Chinese counterparts about potential investments in the eurozone's third-largest economy, an Italian official said.

A spokesman for Italian Finance Minister Giulio Tremonti declined to comment on possible talks on Chinese investments in Italy. News of the Chinese interest comes on the eve of a bond sale of 7 billion euros ($9.6 billion).

Officials in German Chancellor Angela Merkel's government are debating how to shore up the country's banks should Greece fail to meet the budget-cutting terms of its aid package, three coalition officials said on Friday. BNP Paribas SA, Societe Generale SA and Credit Agricole SA may have their ratings cut by Moody's this week because of their holdings of Greek debt, two people with knowledge of the matter said.

China's central bank sold more than 20 billion yuan ($3.13 billion) of additional bills to Industrial & Commercial Bank of China Ltd, China Construction Bank Corp and some other lenders after they were judged to have lent excessively, the Beijing News reports, citing an unidentified source.

Liquidity will remain tight as capital inflows slow in the near term, the China Securities Journal wrote in an editorial. There is currently no sign that monetary policy will change as stabilizing prices remains the priority, the editorial said.

China's inbound shipments jumped 30.2 percent from a year earlier to a record $155.6 billion in August, official data showed over the weekend. Exports climbed 24.5 percent, more than economists estimated. New lending rose to 548.5 billion yuan last month, the central bank said on Sunday.

Bloomberg News