By staff reporter Wang Zhen

The Shanghai Stock Exchange appeared vulnerable Tuesday after opening on a pessimistic note at 3282.57, slightly below the composite index's close Monday at 3296.67 amid a controversy over Aluminum Corp. of China, or Chinalco (SHSE: 601600, HKSE: 2600).

The index slumped 5.62 percent Monday, slipping 196.22 points from Friday's close -- the biggest drop since the market rebounded last week, when it finished higher on four consecutive days.

Shares in Chinalco rose to 21.30 in the first half hour of Tuesday morning trading after shrinking 9.35 percent Monday following domestic media reports about alleged financial fraud.

A broad decline in the metals sector contributed to the market downslide Monday. The sector was spooked by the allegations against Chinalco, the largest metals stock in China which, in February, partnered with the U.S. company Alcoa Inc. to buy a stake in global mining concern Rio Tinto.

Chinalco rejected Sunday a report that the former Shandong Aluminum, which Chinalco took over last year, was suspected of fraud. A company statement said “the issue reported in the news is materially misleading” and that “Shandong Aluminum was in compliance with the laws and regulations with respect to its use of proceeds, financial independence and connected transactions as mentioned in the news.”

Chinalco shares had been leading other metals stocks with daily advances of approximately 10 percent for four days in a row last week.

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