The investigation, coming at a time when authorities have pledged to crack down on stock-related crimes, may herald a wide-ranging campaign against insider trading, industry sources said.

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Shanghai-listed Hangxiao Steel said on March 13 that it had won a 34.4 billion yuan (US$4.45 billion) contract to sell construction products and services for public housing projects in Angola.

The statement, which was made after the firm's shares soared by the 10 percent ceiling for six days, buoyed the stock for another four days before it was suspended from trading on March 16.

Industry insiders and media reports raised skepticism that the company could win such a large contract and questioned why its shares soared before the news was made public.

Hangxiao Steel has said that the contract was signed with China International Fund Ltd, a Hong Kong-based firm involved in construction activities in Africa.

It includes 24.8 billion yuan in construction-product sales and 9.6 billion yuan in fees for construction services.

Sources close to the watchdog said yesterday that the stock regulator and its branch in the Zhejiang Province, where Hangxiao Steel is based, have begun investigations into the firm about possible irregularities.

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