SHANGHAI - Stocks on the Chinese mainland fell the most in two months as railway shares plunged after a deadly bullet-train accident, while the political stalemate over the US debt limit boosted concern that the world's biggest economy will default.

An investor looks at the market trend in a stock exchange in Shenyang, Liaoning province, July 25, 2011. [Photo / Xinhua]

CSR Corp and China CNR Corp, the nation's biggest train makers, tumbled more than 9 percent after the weekend train collision killed at least 38 people and prompted the government to order a rail safety inspection.

China Vanke Co led declines for developers as Credit Suisse Group AG said the accident might dampen demand for real estate in cities along new railway lines.

"The train crash may trigger an investment cut in railway construction," said Tu Jun, a strategist at Shanghai Securities Co.

"The failure to reach agreement on the US federal debt limit is hurting investors' confidence in the economic recovery. All the weekend news is bad for stocks."

The Shanghai Composite Index was down 64.33 points, or 2.3 percent, at 2706.46 as of 2:06 pm, the most since May 23. The measure dropped 1.8 percent last week, the first decline in five weeks.

CSR plunged 9.1 percent to 6.03 yuan, set for its lowest close since Oct 29. China CNR dropped 9.4 percent to 5.89 yuan (91 cents), the biggest decline since its listing in December 2009.