September 17, 2019 / 4:40 AM / 2 months ago

China stocks fall as Beijing keeps key rate unchanged; Hong Kong falls

* SSEC -1.0%, CSI300 -0.9%, HSI -1.0%

* U.S., Chinese trade deputy talks to start on Thurs - USTR

* China keeps 1-year money market rate unchanged

SHANGHAI, Sept 17 (Reuters) - China stocks fell on Tuesday as Beijing kept a key money rate unchanged even as recent readings pointed to further downward pressure on the world’s second-largest economy.

** The CSI300 index fell 0.9%, to 3,920.34, by the end of the morning session, while the Shanghai Composite Index lost 1.0%, to 2,999.84.

** The People’s Bank of China partially rolled over loans from its one-year liquidity facility but kept the lending rate unchanged, a sign it is willing to maintain adequate credit to support a slowing economy but wary of excessive stimulus.

** While analysts considered it a measured move, many still expect the central bank to step up stimulus this week by guiding benchmark rates for new loans lower on Friday as central banks globally rush to loosen monetary policy.

** “The PBOC may see the liquidity released via RRR cuts as providing enough liquidity to the market,” said Frances Cheung at Westpac. “A stable MLF rate does not mean LPR cannot fall. There is downside to LPR given its spread over MLF and given the lower funding costs amid the RRR cuts.”

** The PBOC’s move came after data the day before showed economic slowdown deepened in August, which reinforced views China is likely to cut some key interest rates this week to prevent a sharper slump in activity.

** Meanwhile, China’s new home prices grew at a slower pace in August as a cooling economy and existing curbs on speculative buying put a dent on overall demand.

** The CSI300 real estate index softened 0.7%after the housing price data.

** Investors now await the latest developments in the Sino-U.S. trade talks.

** Deputy-level U.S.-China trade talks are scheduled to start in Washington on Thursday, the U.S. Trade Representative’s office said on Monday, paving the way for high-level talks in October aimed at resolving a bitter, 14-month trade war.

** In Hong Kong, stocks extended falls after credit rating agency Moody’s downgraded the island city’s outlook.

** The Hang Seng index dropped 1.0%, to 26,849.72, while the Hong Kong China Enterprises Index lost 1.0%, to 10,520.42.

** Moody’s changed its outlook on Hong Kong’s rating to negative from stable on Monday, reflecting what it called the rising risk of “an erosion in the strength of Hong Kong’s institutions” amid the city’s ongoing protests.

** Hong Kong’s leader, Carrie Lam, said on Tuesday she and her team would begin dialogue sessions with the community next week, while reiterating that violence that has roiled the city over three months of protests must end.

** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.59%, while Japan’s Nikkei index was up 0.02%.

** The yuan was quoted at 7.0893 per U.S. dollar, 0.29% weaker than the previous close of 7.0685.

** The largest percentage gainers in the main Shanghai Composite index were Lanhai Medical Investment Co Ltd , up 10.07%, followed by Jiangsu Shemar Electric Co Ltd, gaining 10.01%, and Shanghai Sinotec Co Ltd , up by 9.98%.

** The largest percentage losers in the Shanghai index were Tianjin Quanyechang Group Co Ltd, down 7.13%, followed by Hangzhou Silan Microelectronics Co Ltd, losing 6.32%, and Lifan Industry Group Co Ltd, down by 6.12%.

** The top gainers among H-shares were ENN Energy Holdings Ltd, up 2.37%, followed by China Shenhua Energy Co Ltd , gaining 1.56%, and ANTA Sports Products Ltd , up by 1.45%.

** The three biggest H-shares percentage decliners were Geely Automobile Holdings Ltd, which fell 3.36%, China Petroleum & Chemical Corp, which lost 3.2% and CITIC Securities Co Ltd, down by 3.0%.

** As of 04:15 GMT, China’s A-shares were trading at a premium of 28.67% over the Hong Kong-listed H-shares.

Reporting by Luoyan Liu and John Ruwitch; Editing by Subhranshu Sahu

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