Asia-Pacific stock markets on Tuesday retreated from seven-week highs hit the previous session, with Shanghai falling below the level marking a halving in value from its peak in October last year.

The Shanghai Composite Index fell by more than 3 per cent in early trading to as low as 3,007.866 - below the 3,062 level which marks a 50 per cent decline from the peak of 6,124.044 hit during trading on October 16, 2007, and less than half the closing level of 6,092.06 on that day. The index was down 3 per cent at 3,022.49 at the midday break.

Shanghai was the best performer of Asia's big exchanges in 2007 but shares there are now back to levels of late March last year. The market has been besieged by subprime worries and assessments by analysts that equities were overvalued.

Shanghai shares have plunged over the past six months as fast as they surged in the first part of 2007. The Shanghai Composite jumped 141 per cent between mid-February 2007 and the October peak, at which point it had risen 500 per cent since July 2005.

The fall on Tuesday came despite the authorities' announcement over the weekend of measures to restore confidence in the market .The composite index initially rallied 6.8 per cent on Monday but closed with a gain of just 0.7 per cent as profit-taking emerged.

Among the big movers in Shanghai on Tuesday, Guangdong Nanyang Cable slid 6.3 per cent to Rmb16.10, Ping An Insurance lost 3.7 per cent to Rmb54.91 and Jinduicheng Molybdenum, which listed last week, shed 9.6 per cent to Rmb18.83.

Losses in Hong Kong were limited as refiner PetroChina (NYSE: PTR - News) jumped 3.8 per cent to HK$10.50 and rival Sinopec rose by 2.8 per cent to HK$7.68. The Hang Seng index was 0.8 per cent lower at the lunchtime break at 24,521.01 and the main sub-index of mainland companies listed in Hong Kong was 0.1 per cent lower at 13,000.05.

However, Lenovo, the PC maker, dropped 5.5 per cent to HK$5.65 after US computer company IBM sold a big block of shares at a 6 per cent discount to the Lenovo's closing price on Monday. IBM sold its PC business to Lenovo in May 2005.

China Mobile, the mainland's largest mobile phone operator, fell 2.8 per cent to HK$130.90 despite a 37 per cent rise in first-quarter profit.

Elsewhere, the MSCI Asia Pacific index was 0.8 per cent lower at 147.58 by late morning in Tokyo, led by banks and technology shares. Oil hovered near its record high of $117.60 a barrel, with Nymex light sweet crude trading at $117.50 late morning in Singapore.

The Nikkei 225 average was 1 per cent lower at 13,560.63 in early afternoon trading and the broader Topix index was down 1.4 per cent at 1,312.99. Nissan Motor (NASDAQ: NSANY - News) dropped 3.6 per cent to Y886 after a downgrade by Nikko Citigroup, dragging down the sector. Toyota (NYSE: TM - News) fell 2.2 per cent to Y5,250 and Honda (NYSE: HMC - News) fell 2.1 per cent to Y3,260.

Nomura (NYSE: NMR - News) , Japan's largest brokerage, fell nearly 3 percent after saying Japan's Securities and Exchange Surveillance Commission is investigating allegations of insider trading in the mergers and acquisitions department. By early afternoon the stock was down 0.8 per cent at Y359.

Trading in South Korea was dominated by news that Samsung Group Chairman Lee Kun-hee was stepping down after last week being charged for tax evasion and breach of trust.

The Kospi was off 0.6 per cent early in the afternoon at 1,790.33, but the effect of the news on Samsung group members and affiliates was mixed.

Samsung C&T, the group's construction and trading arm, slumped 6.6 per cent to Won72,600 and Samsung Engineering fell 4.3 per cent to Won89,800. Samsung Electronics was almost unchanged at Won674,000, and Cheil Commmunications, Samsung's advertising subsidiary, rose 3.7 per cent to Won266,500.

Elsewhere on the Seoul market, First Fire & Marine Insurance surged 14.7 per cent to Won17,950 - an 11-year high - after Hanwha said it would buy a stake in the company. Hanwha shares fell 4.5 per cent to Won55,000.

Australia's S&P/ASX 200 index was 1 per cent lower by mid-afternoon in Sydney at 5,544.50, with the finance sector accounting for nearly half of the decline. The three biggest decliners were all banks: National Australia Bank (NYSE: NAU - News) , the biggest bank by assets in the country, slid 2.0 per cent to A$28.87; Commonwealth Bank of Australia fell 1.9 per cent to A$43.05; and Australia & New Zealand Banking lost 2.3 per cent to A$21.01.

Macarthur Coal, which on Monday revealed a takeover approach from an unnamed bidder, rose 6.2 per cent to A$16.14.

In India, the Sensex was 0.3 per cent lower at 16,683.98 as trading got under way in Mumbai.