Concerns over pressure due to fund raising exercises as well as uncertainties over the European debt crisis are likely to hover over the Shanghai stock market this week, observers said.

The Shanghai Composite Index dropped 4 percent last week to close at 2,553.59 last Friday. Turnover fell to a three-month low of 61.72 billion yuan (US$9.04 billion).

The index is not expected to rebound significantly as investors are still cautious about a possible shift in the Chinese government's macroeconomic policies, according to Lianxun Securities' analyst Du Mingxue. He forecast the key index is likely to stay around 2,500 points in the near future

Galaxy Securities' analyst Qin Xiaobin said investors "are concerned about possible fund-raising plans in future."

The Agricultural Bank of China said last Friday it may sell as many as 22.24 billion A shares in its initial public offering, said to be the world's biggest, in Shanghai.