January 6, 2020 / 7:40 AM / a month ago

China blue-chip stocks end lower as Middle East tensions weigh

SHANGHAI, Jan 6 (Reuters) - China’s blue-chip index gave up early gains to end lower on Monday as rising tensions in the Middle East dampened sentiment, forcing investors to overlook positive cues such as progress in U.S.-China trade talks and Beijing’s policy support to prop up the economy.

** The blue-chip CSI300 index ended 0.4% lower at 4,129.30, while the Shanghai Composite Index was flat at 3,083.41.

** U.S. President Donald Trump threatened to impose sanctions on Iraq and retaliate against Iran if it strikes back after the killing of its top commander. His threat against Iraq comes after its parliament voted in favour of expelling U.S. troops.

** Favourable news and factors, including the Sino-U.S. trade deal progress and Beijing’s policy support to help the real economy, have been largely factored in the strong rally in the A-share market recently, said Luo Kun, an analyst with Fortune Securities.

** Any headwinds, including the sudden flare-up in Middle East tensions, could lead to profit-taking as sentiment soured, Luo said.

** Losses on the mainland were more subdued, compared with other Asian markets, as investors expect more long-term funds.

** China’s Banking and Insurance Regulatory Commission in a document published last week said it would promote the conversion of household savings into long-term funds in capital markets, which analysts said would help underpin the onshore equities market in the long run.

** Energy shares rallied as oil prices gained, with index heavyweight PetroChina rising as much as 5.5%.

** The CSI300 energy index ended up 2.7% — a six-month high.

** On the trade front, the South China Morning Post reported on Sunday a Chinese delegation plans to travel to Washington on Jan. 13 for the signing of the U.S.-China Phase 1 trade deal.

** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.90%, while Japan’s Nikkei index was down 1.91%.

** The yuan was quoted at 6.976 per U.S. dollar, 0.16% weaker than the previous close of 6.965.

** By 0708 GMT, China’s A-shares were trading at a premium of 27.14% over the Hong Kong-listed H-shares. (Reporting by Luoyan Liu and Brenda Goh; editing by Uttaresh.V)

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