March 26, 2019 / 7:39 AM / a month ago

China shares extend slump on slowdown, trade concerns

* Shanghai Composite index -1.5 pct, CSI300 -1.1 pct

* Next round of U.S.-China trade talks this week

SHANGHAI, March 26 (Reuters) - Chinese shares fell on Tuesday, extending the previous session’s sharp losses as investors remained concerned over the outlook for global growth and the next round of China-U.S. trade talks. ** At the close, the Shanghai Composite index was down 1.51 percent at 2,997.10 points. ** The blue-chip CSI300 index was down 1.13 percent, with its financial sector sub-index lower by 0.76 percent, the real estate index down 0.42 percent and the healthcare sub-index down 1.59 percent. But consumer staples firms rebounded from heavy losses on Monday, gaining 0.57 percent. ** The smaller Shenzhen index ended down 2.18 percent and the start-up board ChiNext Composite index was weaker by 2.316 percent. ** The U.S. Federal Reserve should consider raising the proportion of short-term Treasury bonds it holds to give itself more options to respond to economic pullbacks, as an inverted U.S. yield curve sparked concerns of a recession in the world’s largest economy. ** Investors are also looking ahead to the next round of trade talks as a U.S. trade delegation visits China March 28-29. The U.S.-China trade war poses the biggest risk to global stability and fiscal stabilisation is needed to respond to economic shocks in Europe, IMF First Deputy Managing Director David Lipton said on Monday. ** Analysts at China Fortune Securities said foreign investors’ eroding sentiment was likely to continue to drag on mainland markets. ** “In the near term, the risks of further market drops have not been fully released, and the index still has potential for further drops,” they said in a note. “Recent sustained net outflows of foreign capital also show that offshore investors’ risk appetite has fallen ahead of onshore investors.” ** Chinese Premier Li Keqiang on Monday reaffirmed Beijing’s pledge to further open up to foreign investment as he met with global business executives, and sought to assure them that the rights of foreign firms would be protected. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.06 percent, while Japan’s Nikkei index closed up 2.15 percent. ** At 07:15 GMT, the yuan was quoted at 6.713 per U.S. dollar, 0.06 percent weaker than the previous close of 6.709. ** The largest percentage gainers on the main Shanghai Composite index were DuoLun Technology Corporation Ltd, up 10.06 percent, followed by Hunan Huasheng Co Ltd, gaining 10.03 percent, and Dalian BIO-CHEM Co Ltd, up by 10.02 percent. ** The largest percentage losers on the Shanghai index were Shandong Jiangquan Industry Co Ltd, down 10.07 percent, followed by Xinjiang Talimu Agriculture Development Co Ltd, losing 10.04 percent, and Beijing Airport High-Tech Park Co Ltd, down by 10.03 percent. ** So far this year, the Shanghai stock index is up 20.2 percent and the CSI300 has risen 22.9 percent, while China’s H-share index listed in Hong Kong is up 10.6 percent. Shanghai stocks have risen 1.91 percent this month. The sharp rally in Chinese stocks this year has been driven more by investor optimism than fundamentals. (Reporting by Andrew Galbraith; Editing by Subhranshu Sahu)

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