* China shares fall on inflation concern, despite data
* Hong Kong stocks down as finance, telecom plays weigh
* Esprit down on weak sales; Little Sheep up on Yum's move
(Updates to midday)
By Donny Kwok, Claire Zhang and Edmund Klamann
HONG KONG/SHANGHAI, Oct 22 (Reuters) - Hong Kong and China
stcoks fell on Thursday, weighed down by concerns about
inflation and possible monetary tightening ahead as economic
data came in strong, as expected, bolstering confidence for
economic recovery.
China's key stock index edged down 0.05 percent on Thursday
with the Shanghai Composite Index .SSEC ending the morning at
3,068.972 points, although gaining Shanghai A shares outnumbered
losers by 486 to 374, while turnover slipped to 64 billion yuan
($9.4 billion) from Wednesday morning's 77 billion yuan.
China's annual GDP growth accelerated to 8.9 percent in the
third quarter from 7.9 percent in April-June, in line with
forecasts, buoyed by strong investment spending and bank lending
that more than made up for a slump in exports. [ID:nSP527740]
"The data was as strong as expected so the index was stable
this morning, but government comments about keeping a close eye
on controlling inflation suggest inflation pressures are
increasing and monetary policy may move toward tightening," said
Wen Lijun, an analyst at Nanjing Securities.
She added that firm third-quarter earnings could support the
index above 3,000 points although it may slip back to its 60-day
moving average, now at 3,027 points, as it consolidates, with
the government comments highlighting inflation outweighing the
strong economic data.
A National Bureau of Statistics spokesman told a news
conference: "At present China faces no inflation problem, but
China must pay close attention to inflation expectations."
Deflation eased in September, with consumer prices falling
only 0.8 percent from a year earlier, compared with a 1.2
percent drop in August, Thursday's data showed.
China's State Council, or cabinet, late on Wednesday voiced
confidence that the economy had recovered from the global
financial crisis, sending its clearest signal yet that it might
gradually unwind its ultra-loose pro-growth policies.
[ID:nPEK212984] [ID:nPEK238944]
The country's biggest lender, Industrial & Commercial Bank
of China (601398.SS), was flat at 5.14 yuan.
Steel shares were soft, with industry leader Baoshan Iron
and Steel (600019.SS) down 1.11 percent at 7.10 yuan. The
official China Securities Journal reported that iron ore prices
may rise 30 percent in 2010.
Foshan Plastics Group (000973.SZ) climbed 7.59 percent to
9.07 yuan after saying it had expanded a project with Chinese
electric car and battery maker BYD Co Ltd (1211.HK), which it
forecast could contribute 62.5 million yuan to net profit after
tax each year.
HONGKONG DOWN AS FINANCE, TELECOMS WEIGH
Telecommunications and financial shares weighed on the Hong
Kong market after weak earnings at telecoms providers and a
broker downgrade of top U.S. bank Wells Fargo triggered selling
of finance-related shares including banks.
ICBC (1398.HK), China's largest bank, fell 1.74 percent to
HK$6.22. China Construction Bank (0939.HK), the country's
second-biggest lender, lost 1.31 percent to HK$6.80.
China Mobile (0941.HK), the world's largest mobile carrier,
fell 1.29 percent to HK76.25 and China Telecom (0728.HK),
China's top fixed-line phone company, lost 2.96 percent to
HK$3.61.
"The market turned cautious and positive sentiment weakened
when no breakthrough on the upside was noted," said Alex Tang, a
director at Core Pacific-Yamaichi International. "The market
needs fresh incentives for further gains."
Brokers said abundant liquidity beccause of the weak U.S.
dollar could lend support to the market, especially as the
latest round of data boosted optimism over China's economic
outlook.
The benchmark Hang Seng Index .HSI fell 1.06 percent or
235.82 points to 22,082.29 at midday.The China Enterprises
Index of top locally listed mainland Chinese companies .HSCE
was down 1.32 percent at 12,830.01.
Turnover increased to HK$39.32 billion ($5.1 billion) from
midday Wednesday's HK$35.43 billion.
Hong Kong's central bank, the Hong Kong Monetary Authority,
injected HK$5.038 billion ($650 million) into the money market
on Thursday to stem an appreciating Hong Kong dollar HKD= as
the territory continued to attract fund inflows. [ID:nHKG240188]
Clothing retailer Esprit Holdings (0330.HK) fell to a
session low HK$53.10 before steadying at HK$53.55. Esprit said
its sales fell 8 percent in the quarter ended September amid
weak global demand. [ID:nHKG194317]. A Deutsche Bank research
note on Thursday said it had maintained a "buy" rating on the
stock as performance was largely on track.
Restaurant chain operator Little Sheep Group (0968.HK) rose
to a record high of HK$4.69 before steadying at HK$4.40, still
up 1.62 percent from the previous close. The operator said Yum!
Brands Inc (YUM.N) would raise its stake in the company to 27.3
percent from 20 percent for about HK$300 million ($39 million)
and would remain the second-largest shareholder after the deal.
A Bank of America Merrill Lynch research note on Thursday
said the deal underscored Yum's interest in Little Sheep and
could help with investor sentiment.
(Editing by Chris Lewis)
