Hong Kong, China shares to snap winning streaks as China inflation picks up

Thu May 9, 2013 12:32am EDT

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* Solar plays hurt by EU import duties

By Yimou Lee

HONG KONG, May 9 (Reuters) - Hong Kong and China shares were set to snap winning streaks on Thursday as Chinese inflation data came in slightly stronger than expected and after a move by the central bank to drain funds triggered a rotation out of recent outperformers.

China's April annual consumer inflation quickened to 2.4 percent from a year earlier, versus a 2.3 percent Reuters consensus, while producer prices dropped 2.6 percent, more than an expected 2.3 percent.

By midday, the Hang Seng Index was down 0.3 percent at 23,179.5 points, after closing on Wednesday at its highest since Feb. 20. The China Enterprises Index of the top Chinese listings in Hong Kong fell 0.2 percent. Both looked set for their first loss in five days.

The CSI300 of the leading Shanghai and Shenzhen A-share listings fell 0.7 percent from Wednesday's six-week closing high, and looked headed for its first loss in six days. The Shanghai Composite Index was also down 0.7 percent, set for its first loss in five days.

"We have some profit-taking pressure after the inflation data, which provided a catalyst," said Ben Kwong, chief operating officer at securities house KGI Asia.

The Chinese central bank issued bills for the first time since 2011 on Thursday, auctioning 10 billion yuan ($1.63 billion) of three-month bills. The People's Bank of China also drained 92 billion yuan this week.

Growth-sensitive counters that have tracked the rebound in the past week were among the bigger percentage losers.

Anhui Conch Cement shed 2.1 percent from Wednesday's 2-1/2-month closing high in Hong Kong. Its Shanghai listing dived 3.1 percent.

The official China Securities Journal newspaper reported on Thursday that Beijing has drafted plans to crack down on oversupply in industries including steel, cement and glass.

China solar energy shares slid after the European Commission agreed on Wednesday to impose punitive import duties on solar panels from China in a move to guard against what it sees as Chinese dumping of cheap goods in Europe.

GCL-Poly Energy shed 3.1 percent in Hong Kong, and was headed for its worst day in about a month.

Europe-focused clothing retailer Esprit Holdings Ltd sank another 0.6 percent after falling nearly 5 percent on Wednesday following a profit warning.

The company had said on Wednesday it has hired more staff from Inditex to drive its restructuring and implement the fast turnaround on which the larger Spanish rival has built its success.

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