HK, China stocks lower; China Mobile, HKEx slip

By Donny Kwok and Claire Zhang

HONG KONG, March 4 (Reuters) - Hong Kong and China stocks fell on Thursday with financial stocks leading losses on concern over policy tightening. China Mobile and Hong Kong Exchanges & Clearing (HKEx) also retreated.

China's key stock index in Shanghai tumbled 2.38 percent on Thursday in its biggest one-day fall in five weeks, with financial shares weak as persistent concern over policy tightening spurred investors to take profit.

Traders said the recent rally had not been supported by improvements in fundamentals such as the balance of share supply and demand, with regulators continuing to approve a steady stream of share offerings to the market.

'Worries about policy uncertainty and liquidity encouraged profit-taking,' said Li Wenhui, senior analyst at Huatai Securities in Nanjing. He cited new share supplies and monetary policy tightening as negative factors that continued to loom over the market.

The Shanghai Composite Index ended at 3,023.373 points, its lowest close in more than a week and relinquishing much of last week's gain from a rally spurred largely by speculative buying of small-cap shares.

Losing Shanghai stocks outnumbered gainers by 844 to 61, while turnover rose to 144 billion yuan ($21.09 billion) from Wednesday's 136 billion yuan.

Deputy central bank governor Su Ning said on Wednesday that the People's Bank of China was paying serious attention to price pressures.

Cao Xuefeng, analyst at Western Securities, said: 'There is a possibility that February inflation could be higher than expected and this could lead the authorities to tighten monetary policy.'

The financial sector was soft, with Ping An Insurance slipping 2.93 percent to 45.06 yuan. Minsheng Bank fell 2.55 percent to 7.26 yuan and CITIC Securities sagged 3.51 percent to 26.63 yuan.

Renewable energy shares were hit by profit-taking following gains the previous day. Shenzhen Topraysolar, a maker of solar power cells, dropped 6.42 percent to 24.47 yuan and power transmission equipment maker Baoding Tianwei Baobian Electric sank 5.21 percent to 29.81 yuan.

Traders said investors would focus on Premier Wen Jiabao's government work report on Friday and, barring any surprises, the index in the short term is expected to move around the closely watched 125-day moving average, now at 3,079 points and considered a key marker to gauge the dominance of bullish versus bearish sentiment in the market.



HONG KONG FALLS AS CHINA MOBILE, HKEX SLIP

The benchmark Hang Seng Index ended down 1.44 percent or 301.01 points at 20,575.78. The China Enterprises Index of top locally listed mainland Chinese stocks closed down 2.27 percent at 11,775.06, snapping four straight sessions of gains. It hit a six-week high of 12,131.69 early in the session.

Investors locked recent gains by Chinese banks, sending China Construction Bank, the country's second-largest lender, down 2.93 percent. Top lenders ICBC fell 2.54 percent.

'Investors turned cautious with no new catalysts stimulating the market,' said Patrick Yiu, a director at CASH Asset Management. 'Buying interest (for local stocks) weakened as the China market slipped.'

Turnover increased to HK$62.16 billion ($8.01 billion) from Wednesday's HK$59.9 billion.

Investors unloaded China Mobile and HKEx, adding to downward pressure.

China Mobile fell 2.41 percent to its lowest close in two months at HK$72.85, after news that it was in talks to buy a stake in Shanghai Pudong Development Bank to speed up its move into e-commerce.

Analysts said investors disliked the idea of the telecom group investing outside its core business.

'Too much downside is unlikely after the selloff but upside is also seen limited because of its unexciting outlook,' Yiu said.

HKEx fell 2.03 percent to its lowest close in a week at HK$130.10 after the world's second-largest exchange operator by market value posted lower-than-expected quarterly earnings and warned of intense competition around the world.

China Railway Construction fell 4.89 percent to close at a five-week low of HK$9.72. The company said it planned to raise up to 8 billion yuan ($1.2 billion) in sale of yuan-denominated A shares, up to half of which would be sold to its parent.

Bucking the weak market, Standard Chartered rose 5.68 percent to close at a six-week high of HK$193.40. On Wednesday, StanChart reported a record profit for 2009. It also said it planned to raise $500 million to $750 million through an issue of depositary receipts in India during the second quarter of 2010.

((Editing by Chris Lewis))

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