Shares in struggling West China Cement plunged by as much as 34 per cent after a much-needed merger deal with the country''s largest cement maker collapses.

Hong Kong-listed shares of West China Cement dropped as much as 34 per cent to HK$0.71 when it resumed trading Monday morning, compared to the previous close at HK$1.07. It was trading at HK$0.81 at 11:00 am (0300 GMT).

Major rival Anhui Conch Cement offered nearly US$600m for a controlling stake in the firm late last year, but China's commerce authorities failed to approve it by the June 30 deadline, scuppering the deal. A merger with Anhui Conch would have given West China Cement, which posted losses of CNY309m (US$46m) last year, a stronger financial basis.

Analysts believe the deal collapsed because of a "business decision" given the firm's weak books.

"Investors had doubted about its accounting practices... It was trading down for a very long time until an upcoming Anhui Conch deal gave it a boost. Now the stamp of confidence is gone," Jackson Wong, associate director for Simsen Financial Group in Hong Kong, told AFP.

Rumours the deal was in danger saw its shares plunge 33 per cent in Hong Kong on Tuesday before they were suspended from trading. It has lost half its capitalisation in the last two trading days, according to Bloomberg News.

West China Cement reported a loss for the first six months ended 30 June  2016 of CNY113.49m (US$16.93m) or CNY0.021 loss per share, compared to a profit of CNY2.43m, or CNY0.001 per share, for the same period ended 30 June 2015.

Revenue for the first six months ended 30 June 2016 was CNY1.63bn, compared to CNY1.69bn for the same period ended 30 June 2015.

Gross profit for the 1H16 was CNY152.92m, compared to CNY215.97m for the same period ended 30 June 2015. Loss before tax for the first six months ended 30 June , 2016 was CNY112.58m, compared to a profit before tax of CNY35.77m for the same period ended 30 June 2015.