October 16, 2019 / 5:07 AM / 6 months ago

China stocks dip as trade talk optimism fades; HK flat

SHANGHAI, Oct 16 (Reuters) - China stocks fell on Wednesday, as optimism over a concrete U.S.-China trade deal faded, while risk appetite was curbed by lacklustre inflation data. Hong Kong shares were little changed amid the city’s prolonged political crisis.

** China’s blue-chip CSI300 index fell 0.2% to 3,927.01 at midday, while the Shanghai Composite Index lost 0.3% to 2,982.74.

** The Hang Seng index was unchanged at 26,505.95. ** The market erased most of over 1% gains on Monday, spurred by a truce between Beijing and Washington as both sides agreed to work toward a limited deal.

** But the U.S. House of Representatives on Tuesday passed four pieces of legislation, taking a hard line on China over Hong Kong’s pro-democracy movement and a legal dispute around Chinese telecom giant Huawei.

** China’s factory gate prices declined at their fastest pace in more than three years in September as manufacturing cools on weak demand and U.S. trade pressures, which also weighed on the markets.

** Aiding the weak sentiment, data released on Wednesday showed Chinese banks extended more new yuan loans than expected in September, and the country’s central bank injected 200 billion yuan ($28.18 billion) into the banking system via a medium-term liquidity tool.

** “Substantial capital injection through the medium-term lending facility might suggest that there is some weakness in the upcoming macroeconomic figures,” said Gerry Alfonso, analyst at Shenwan Hongyuan Securities.

** Property shares are among the top performing sectors in China, as “capital injections tend to eventually flow, at least partially, to the property sector,” he added.

** But consumer stocks sank, led by top liquor maker Kweichou Moutai Co. The stock dropped as much as 4.2% from a record high hit on Tuesday, after posting worse-than-expected third-quarter results.

($1 = 7.0963 Chinese yuan renminbi)

Reporting by Samuel Shen and John Ruwitch; Editing by Rashmi Aich

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