September 17, 2018 / 5:08 AM / a year ago

China shares down at midday as Trump said to ready new tariffs

* SSEC -1.1 pct, CSI300 -1.1 pct, HSI -1.6 pct

* President Trump expected to announce new tariffs as early as Monday

* Yuan slightly weaker despite firmer-than-expected fixing

SHANGHAI, Sept 17 (Reuters) - China’s stock markets fell on Monday, dragged by reports that U.S. President Donald Trump is planning to unveil a fresh set of tariffs on $200 billion of imported Chinese goods in the latest volley of a heated trade war.

At the midday break, both the Shanghai Composite index and the blue-chip CSI300 index were 1.1 percent lower.

Hong Kong’s Hang Seng index was down 1.6 percent at midday, and the China Enterprises index fell 1.4 percent.

A senior official in the Trump administration told Reuters that Trump would announce the new tariffs as early as Monday. China has vowed to retaliate to any new U.S tariff action, and may decline to participate in further talks if new tariffs are announced.

“China would very unlikely be visiting the U.S. against this backdrop with both sides looking to preserve face and be seen to be in a strong position,” Everbright Sun Hung Kai analysts said in a note Monday.

The new tariffs, reported to be 10 percent, will cover a wide range of items including internet technology products and other electronics, printed circuit boards and consumer goods including Chinese seafood, furniture and lighting products, tires, chemicals, plastics, bicycles and car seats for babies.

Trump directed aides to proceed with the new tariffs despite Treasury Secretary Steven Mnuchin’s attempts to restart trade talks with China.

On Monday, shares fell across the board. A CSI300 subindex tracking the real estate sector was 1.7 percent lower, industrial firms fell 1.2 percent, and healthcare firms lost 2.3 percent.

The drop in real estate shares came despite data showing China’s August home prices accelerated at the fastest pace in nearly two years.

Consumer staples were a rare bright spot, with the sub-index eking out a 0.2 percent rise on gains by distilleries.

China’s yuan also weakened on the prospect of a hotter trade war, despite the central bank setting the midpoint of the currency’s daily trading band firmer than expected. The yuan traded as low as 6.8756 per dollar before strengthening to 6.8685 per dollar at 0409 GMT.

In Hong Kong, all but one Hang Seng constituent fell, with Apple Inc supplier Sunny Optical Technology Group Co Ltd dropping 4.7 percent.

The sub-index of the Hang Seng index tracking energy shares dipped 0.7 percent while the IT sector fell 2.8 percent.

Macau gaming stocks also pulled back in Hong Kong, with shares of Melco International Development falling as much as 5.7 percent in the morning session, after Macau was hit by a severe typhoon on the weekend, prompting casino closures.

Typhoon Mangkhut made landfall in China’s Guangdong province on Sunday, causing widespread flooding and heavy damage, and leaving at least four people dead.

Sugar producers rose after the typhoon damaged farmland in Guangdong, which pushed sugar prices higher and supported those firms based in other provinces. Nanning Sugar Industry Co Ltd jumped 6.1 percent, and Guangxi Yuegui Guangye Holdings Co Ltd climbed 2.6 percent.

Reporting by Andrew Galbraith; Editing by Sam Holmes

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