March 26, 2019 / 4:52 AM / 6 months ago

China stocks extend fall amid global growth worries

* SSEC -1.0 pct, CSI300 -0.6 pct, +HSI 0.1 pct

* Waning global risk appetite seen driving outflows - analysts

* Chinese premier reaffirms pledge to open up to foreign investment

SHANGHAI, March 26 (Reuters) - Chinese shares fell on Tuesday, extending the previous day’s sharp losses, as investor sentiment remained fragile amid fears of a U.S. recession while concerns over a protracted U.S.-China trade war also weighed.

** At the midday break, the Shanghai Composite index lost 0.99 percent to 3,012.90 points. ** China’s blue-chip CSI300 index was down 0.59 percent, with its financial sector sub-index easing 0.52 percent and the healthcare sub-index losing 0.97 percent. But the consumer staples sector rose 1.22 percent and the real estate index gained 0.31 percent after a sharp fall on Monday. ** The U.S. Federal Reserve should consider raising the proportion of short-term Treasury bonds it holds to give itself more options to respond to economic pullbacks, as an inverted U.S. yield curve sparked concerns of a recession in the world’s largest economy. ** The U.S.-China trade war poses the biggest risk to global stability and fiscal stabilisation is needed to respond to economic shocks in Europe, IMF First Deputy Managing Director David Lipton said on Monday. ** Analysts at China Fortune Securities said foreign investors’ eroding sentiment is likely to continue to drag on mainland markets. ** “In the near term, the risks of further market drops have not been fully released, and the index still has potential for further drops,” the analysts said in a note. “Recent sustained net outflows of foreign capital also show that offshore investors’ risk appetite has fallen ahead of onshore investors,” they said. ** Chinese Premier Li Keqiang on Monday reaffirmed Beijing’s pledge to further open up to foreign investment as he met with global business executives, and sought to assure them that the rights of foreign firms would be protected. ** Chinese H-shares listed in Hong Kong were steady at 11,231.73, while the Hang Seng Index was up 0.14 percent at 28,564.30. ** The smaller Shenzhen index was down 1.03 percent and the start-up board ChiNext Composite index lost 0.93 percent. ** Around the region, MSCI’s Asia ex-Japan stock index firmed 0.22 percent while Japan’s Nikkei index gained 2.13 percent. ** The yuan was quoted at 6.7091 per U.S. dollar, nearly unchanged from the previous close of 6.709. ** The largest percentage gainers on the main Shanghai Composite index were DuoLun Technology Corporation Ltd, up 10.06 percent, followed by Zhengping Road & Bridge Construction Co Ltd, gaining 10.02 percent, and Chongqing Gangjiu Co Ltd, rising 10 percent. ** The largest percentage losers on the Shanghai index were Beijing Airport High-Tech Park Co Ltd, down 10.03 percent, followed by Beijing Teamsun Technology Co Ltd , losing 10.03 percent and Chongqing Three Gorges Water Conservancy and Electric Power Co Ltd, declining 9.79 percent. ** So far this year, the Shanghai stock index is up 22.02 percent, while China’s H-share index is up 10.9 percent. Shanghai stocks have risen 3.47 percent this month. The sharp rally in Chinese stocks this year has been driven more by investor optimism than fundamentals. ** The top gainers among H-shares were Shenzhou International Group Holdings Ltd, up 3.67 percent, followed by China Telecom Corp Ltd, gaining 2.29 percent and Hengan International Group Company Ltd, adding 1.95 percent. ** The three biggest H-shares percentage decliners were SINOPHARM GROUP CO LTD, which fell 3.16 percent, GF Securities Co Ltd, down 1.6 percent and Haitong Securities Co Ltd, 1.5 percent lower. ** In Hong Kong, the sub-index of the Hang Seng index tracking energy shares rose 0.6 percent while the IT sector fell 0.4 percent. The top gainer on the Hang Seng was Shenzhou International Group Holdings Ltd, up 3.67 percent, while the biggest loser was China Shenhua Energy Co Ltd , which was down 1.42 percent.

Reporting by Andrew Galbraith; Editing by Shreejay Sinha

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