China, HK stocks retreat after lacklustre inflation data


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* SSEC -0.6 pct, CSI300 -0.9 pct, HSI -1.6 pct

* China’s producer prices slow for 7th straight month, raising deflation fears

* U.S. trade envoys to meet China’s Xi, no decision on deadline extension

SHANGHAI, Feb 15 (Reuters) – China and Hong Kong stocks dropped on Friday, as latest official data raised deflation fears, while investors were worried about uncertainties over the Sino-U.S. trade negotiations.

** The CSI300 index fell 0.9 percent to 3,371.36 points at the end of the morning session, while the Shanghai Composite Index lost 0.6 percent to 2,702.83 points.

** The Hang Seng index dropped 1.6 percent to 27,964.43 points, while the Hong Kong China Enterprises Index slipped 1.8 percent to 10,970.05 points.

** China’s factory-gate inflation slowed for a seventh straight month in January to its weakest pace since September 2016, raising concerns the world’s second-biggest economy may see the return of deflation as domestic demand cools.

** Consumer inflation, meanwhile, eased in January from December to a 12-month low due to slower gains in food prices, official data showed on Friday, despite the Lunar New Year holiday, which typically pushes up demand for food.

** There are also concerns over the progress of the Sino-U.S. trade talks.

** The Trump administration’s top two negotiators in trade talks with China will meet on Friday with Chinese President Xi Jinping, but there has been no decision to extend a March 1 U.S. deadline for a deal, White House economic adviser Larry Kudlow said on Thursday.

** “Investors are locking in profits after a recent unexpected strong rally, which caught many fund managers off-guard,” said Yan Kaiwen, analyst, China Fortune Securities.

** There are also uncertainties around the Sino-U.S. trade spat which could weigh on the short-term trend, Yan added.

** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.96 percent, while Japan’s Nikkei index was down 1.22 percent.

** The yuan was quoted at 6.7761 per U.S. dollar, 0.06 percent weaker than the previous close of 6.7718.

** The largest percentage gainers in the main Shanghai Composite index were Shenyang Jinshan Energy Co Ltd, which gained as much as 10.27 percent, followed by Hunan New Wellful Co Ltd, which rose up to 10.08 percent and Triumph Science & Technology Co Ltd, which climbed as much as 10.08 percent.

** The largest percentage losses in the Shanghai index were Zhongmin Energy Co Ltd, which slipped as much as 4.7 percent, followed by Zhejiang Jiaao Enprotech Stock Co Ltd , which lost up to 4.62 percent and SAIC Motor Corp Ltd, which fell up to 4.53 percent.

** So far this year, the Shanghai stock index is up 9.05 percent, while China’s H-share index is up 10.3 percent. Shanghai stocks have risen 5.23 percent this month.

** The top gainers among H-shares were Guangdong Investment Ltd, up 0.27 percent, followed by Hengan International Group Company Ltd, gaining 0.08 percent and China Mobile Ltd, up by -0.18 percent.

** The three biggest H-shares percentage decliners were PICC Property and Casualty Co Ltd, which has fallen 4.72 percent, Guangzhou Automobile Group Co Ltd, which has lost 3.9 percent and CITIC Securities Co Ltd, down by 3.8 percent.

** About 11.42 billion shares have traded so far on the Shanghai exchange, roughly 73.5 percent of the market’s 30-day moving average of 15.54 billion shares a day. The volume traded was 19.70 billion as of the last full trading day.

** As of 0401 GMT, China’s A-shares were trading at a premium of 18.13 percent over the Hong Kong-listed H-shares. (Reporting by Luoyan Liu and John Ruwitch, Editing by Sherry Jacob-Phillips)


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