(Yicai  Global) Jan. 31 -- China's stock markets lost most of their early gains  in afternoon trading, as more listed firms than expected issued  earnings warnings over the lunch break, hampering investor confidence.

As  the 2018 financial report season approaches, a higher-than-expected  number of companies have issued warnings with expected losses being  wider than the market had anticipated.

The benchmark  Shanghai Composite Index closed up 0.35 percent at 2,584.57 points  while the Shenzhen Component Index edged up 0.12 percent to 7,479.22.  The ChiNext Price Index, which tracks growth enterprises in Shenzhen,  closed 0.23 percent lower at 1,227.99.

For the month of January,  the Shanghai Composite Index closed up 3.64 percent, while the Shenzhen  Component Index ended 3.31 percent higher. The ChiNext Price Index ended  the month up 1.8 percent. A positive month for all three major bourses  has not been a common occurrence over the past 10 months.

Among  the listed firms issuing earnings warnings was urban gas pipeline  provider Jinhong Holding Group [SHE:000669] which expects a loss of  CNY1.7 billion (USD250 million) for 2018, compared with net profit of  CNY240 million the year before. Its stock price quickly hit the maximum  10 percent fall allowed on the market, having been trading 3 percent up  beforehand. 

Metals producer Yunnan Aluminium  [SHE:000807] confirmed a possible net loss of CNY1.5 billion in 2018,  compared with net earnings of CNY657 million the year before. Its share  price also nosedived on the news.

Automation systems  provider Sotech Smarter Equipment [SHE:300173] anticipates a CNY830  million to CNY835 million net loss compared with CNY67.30 million in net  profit the year before. Its shares also hit the limit  down.