* CSI300 and Shanghai Composite Index close down 1.3-1.8 pct
* ChiNext small-cap growth board ends down 5.1 percent
* Premier Li makes no mention of stock chaos in statement
* Another 200 companies seek trading suspension -report
* Big 5 banks up on targeted buying, up near 10 pct limit
By Samuel Shen and Pete Sweeney
SHANGHAI, July 7 (Reuters) - Chinese stocks fell on Tuesday, taking little comfort from a slew of support measures unleashed by Beijing in recent days, and unnerved by Chinese Premier Li Keqiang's failure to mention the market chaos in a statement on the economy.
Before the market opened, Li said in comments posted on a government website that China had the confidence and ability to deal with challenges faced by its economy, but had nothing to say on the three-week plunge that has knocked around 30 percent off Chinese shares since mid-June. ID:nL3N0ZN03A
After a brief pause in the slide on Monday, the CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen ended down 1.8 percent on Tuesday, while the Shanghai Composite Index .SSEC lost 1.3 percent. .SS
The ChiNext growth board .CHINEXTC , home to some of China's giddiest small-cap valuations, fell 5.1 percent.
Qi Yifeng, analyst at consultancy CEBM, said government measures were not strong enough to reverse the downtrend, especially as it was a liquidity issue for many who had borrowed to buy shares and were now forced to sell to meet margin calls.
"It's just a matter of whether it will fall more slowly, or continue to slump in freefall," he said.
Exchange data shows the balance of outstanding margin loans has fallen more slowly than the market drop and that leveraging has consequently increased to a record proportion of the market, creating a vicious cycle of pressure to sell.
Global investors have grown increasingly concerned that a full-blown crash could destabilise the world's second-biggest economy.
Commodities markets are also taking fright at what the slump says about the underlying economy, with prices of copper CMCU3 , coal CRFRMc11 , natural gas LNG-AS and iron ore .IO62-CNI=SI falling toward their 2015 lows. ID:nL8N0ZN02O
ORCHESTRATED CAMPAIGN
In an attempt to arrest the sell-off, China has arranged a curb on new share issues and orchestrated brokerages and fund managers to promise to buy at least 120 billion yuan ($19 billion) of stocks, helped by a state-backed margin finance company, which in turn has a direct liquidity line from the central bank.
The official Shanghai Securities News reported that China's major insurance firms ploughed tens of billions of yuan into blue-chip exchange-traded funds (ETF) and large caps on Monday.
China Life Insurance Co Ltd 601628.SS bought a net 10 billion yuan in index funds, while China Pacific Insurance Group 601601.SS and other insurers each invested more than 1 billion yuan, the newspaper said. ID:nL3N0ZN09Z
That helped the indexes rise just over 2 percent on Monday, but the relief was shortlived.
Unlike other major stock markets, which are dominated by professional money managers, retail investors account for around 85 percent of China trade, which exacerbates volatility.
"Where is the promised 120 billion yuan?" asked one retail investor from Hangzhou, who gave his surname as Liu. "It's all going to blue chips. Don't they know that retail investors are all trapped in the small caps? My stocks opened up 10 percent but closed down the (10 percent) limit!"
Blue chips fared best as a result of the targeted buying, especially the big five banks; Industrial and Commercial Bank of China 601398.SS , China Construction Bank 601939.SS , Bank of China 601988.SS , Agricultural Bank of China 601288.SS and Bank of Communications 601328.SS were all up almost by the 10 percent limit. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ COLUMN-China risk story just getting started ID:nL3N0ZM1QT
BREAKINGVIEWS-Shares still look overvalued
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GRAPHIC-China economy, trade: http://link.reuters.com/fut96s ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
DUCKING OUT
Traders are increasingly nervous about the unusually large number of Chinese companies asking for their shares to be suspended from trading, fearing that many of them are looking for excuses to duck out of the turmoil. ID:nL8N0ZM173
About a quarter of the roughly 2,800 companies listed in Shanghai and Shenzhen had filed for a trading halt by the close on Monday, and on Tuesday the Securities Times said another 200 announced a suspension. ID:nB9N0WZ03F
The plunge in China's previously booming stock markets, which had more than doubled in the year to mid-June, is a major headache for President Xi Jinping and China's top leaders, who are already struggling to avert a sharper economic slowdown.
Beijing's interventionist response has also raised questions about its ability to enact the market liberalisation steps that are a centrepiece of its economic reform agenda.
A surprise interest-rate cut by the central bank at the end of June, relaxations in margin trading and other "stability measures" did little to calm investors.
Underlining scepticism beyond mainland China about the sustainability of the new measures, Hong Kong listed shares of Chinese brokerages plunged on Monday. ID:nL3N0ZM2N0
In addition, 28 companies suspended their previously approved IPO plans.
Lei Mao, assistant professor of finance at Warwick Business School, said measures to support the market distorted the allocation of funds and trading behaviour and could create the conditions for further sharp falls.
"Even an optimistic investor should not participate in the market for now," he said. ($1 = 6.2082 Chinese yuan renminbi)