June 16, 2017 / 7:21 AM / 7 months ago

China's shares end lower, blue chips snap 5-week winning streak

SHANGHAI, June 16 (Reuters) - China’s stocks fell on Friday to end the week lower as weak producer inflation and investment data reinforced concerns of a renewed slowdown in the world’s second-biggest economy.

The blue-chip CSI300 index fell 0.3 percent, to 3,518.76 points, while the Shanghai Composite Index also lost 0.3 percent to 3,123.17 points.

For the week, CSI300 dropped 1.6 percent, while SSEC contracted 1.1 percent.

The rally in blue-chips, which have far outperformed small-caps this year, appear to be losing steam amid signs of monetary tightening and renewed economic weakness.

The Shanghai SE 50 Index, an index tracking the 50 most representative blue-chips in Shanghai, slumped 2.6 percent, posting its worst week in 2017.

Data this week showed that China’s economy generally remained on solid footing in May, but tighter monetary policy, a cooling housing market and slowing investment reinforced views that it will gradually lose momentum in coming months.

Yu Gang, analyst at Zhongtai Securities, said that upside potential for mainland shares is limited, as liquidity remains tight while borrowing costs rise.

In a sign that China’s central bank intends to stabilise market sentiment, the People’s Bank of China (PBOC) injected a net 410 billion yuan ($60.17 billion) into money markets this week, the biggest weekly injection since mid-January.

For the week, banking and infrastructure stocks dragged the most among main sectors, sliding 3.1 percent and 3.3 percent, respectively. ($1 = 6.8135 Chinese yuan) (Reporting by Luoyan Liu and John Ruwitch; Editing by Jacqueline Wong)

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