China stocks fall on weak factory inflation, trade war worries

SHANGHAI, June 12 (Reuters) - China stocks fell on Wednesday after the previous session’s rally, as weak factory inflation data and prospects of an escalation in the Sino-U.S. trade war curbed risk appetite.

** The blue-chip CSI300 index fell 0.8%, to 3,691.10 points, while the Shanghai Composite Index lost 0.6%, to 2,909.38 points. ** China’s factory gate inflation slowed amid sluggish commodity demand and faltering manufacturing activity, reinforcing worries about slowing economic growth.

** In a sign that trade tensions could intensify, U.S. President Donald Trump on Tuesday defended the use of tariffs as part of his trade strategy while China vowed a tough response if the United States insists on escalating trade tensions.

** Shares of real estate companies fell on worries about the sector’s health, after the city of Enshi made moves to stabilise property prices.

** Bucking weakness in the broader market, rare earth stocks jumped after news that China launched a survey of rare earth resources in seven regions on Monday, amid speculation that Beijing may curb exports of the materials to the United States.

** Chengdu Galaxy Magnets Co Ltd and China Northern Rare Earth Group High-Tech Co led the gains.

** Major rare earth producers including China Minmetals Rare Earth Co Ltd, Xiamen Tungsten Co Ltd, Rising Nonferrous Metals Share Co Ltd and Shenghe Resources Holding Co Ltd also advanced. (Reporting by Shanghai Newsroom; Editing by Subhranshu Sahu)