June 28, 2019 / 4:33 AM / a year ago

China stocks lose steam on Trump-Xi trade jitters

* SSEC -0.9%, CSI300 -0.5%, HSI -0.6%, HSCE -0.4%

* Xi blasts protectionism ahead of G20 talks with Trump

* China’s June factory PMI seen in contraction - Reuters poll

HONG KONG, June 28 (Reuters) - China stocks slid on Friday as Beijing and Washington appeared to maintain a tough stance on trade ahead of a highly anticipated meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping this weekend.

** Uncertainty over whether the talks will produce progress in ending the year-long trade war between the world’s two largest economies comes amid signs of rising risks to global growth. ** At the midday break, the Shanghai Composite index was down 0.9% at 2,970.42 points, and slipped 1.1% week-on-week. The blue-chip CSI300 index fell 0.5% on the day, and was down by the same margin on a weekly basis. ** CSI300’s financial sector sub-index slipped 0.4%, the consumer staples sector dipped 0.2%, the real estate index fell 0.5% and the healthcare sub-index lost 0.8%. ** Chinese H-shares listed in Hong Kong dropped 0.4%, while the Hang Seng Index eased 0.6% to 28,460.41. ** The smaller Shenzhen index was down 1.1% and the start-up board ChiNext Composite index was weaker by 1.4%. ** U.S. President Donald Trump and Chinese President Xi Jinping will hold trade talks at 11:30 am local time (0230 GMT) on Saturday at the G20 summit in Osaka, Japan. ** On Friday, Xi said some developed countries are taking protectionist measures that are leading to trade conflicts and economic blockade - calling them the biggest risk of the increase in instability in the global economy. ** Gao Feng, a Chinese commerce ministry spokesman, said on Thursday that Washington must immediately cancel sanctions on Chinese telecoms equipment maker Huawei. ** Trump has agreed to no preconditions for his meeting with Xi and is maintaining his threat to impose new tariffs on Chinese goods, White House economic adviser Larry Kudlow said on Thursday. ** Kudlow also denied media reports suggesting that China was insisting on lifting sanctions on Huawei as part of a trade deal and that the Trump administration had tentatively agreed to delay new tariffs on Chinese goods. ** “We expect A-share sentiment to stay range-bound in the near-term,” Morgan Stanley’s analysts wrote in a report on Friday. ** Even if trade talks resume after the G20 summit, the bank’s analysts are sceptical of a rebound in sentiment “given the recent macro pressure and diminishing effect of trade talk headlines on the equity market.” ** China’s central bank said on Thursday it will maintain support for the slowing economy as global risks rise. ** The comments came as China’s factory activity is expected to have pulled back for a second straight month in June, according to a Reuters poll of analysts. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.2%, while Japan’s Nikkei index slipped 0.4%. ** The largest percentage losses in the Shanghai index were Cashway Technology Co Ltd, down 10%, followed by Hylink Digital Solution Co Ltd, losing 8.9% and Shanghai Shenqi Pharmaceutical Investment Management Co Ltd , down by 7.1%. ** As of 0400 GMT, China’s A-shares were trading at a premium of 28% over the Hong Kong-listed H-shares.

Reporting by Noah Sin, Editing by Sherry Jacob-Phillips

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