July 19, 2018 / 7:32 AM / a year ago

China stocks fall, airlines slump on yuan weakness

SHANGHAI, July 19 (Reuters) - China stocks fell on Thursday, dragged by airliners, as the yuan dropped to a one-year low against the dollar after news that Beijing plans to step up monetary easing measures.

** The blue-chip CSI300 index fell 0.1 percent, to 3,428.34, while the Shanghai Composite Index lost 0.5 percent to 2,772.55 points.

** China’s central bank plans to introduce incentives that will boost the liquidity of commercial banks, helping them expand lending and increase investment in bonds issued by cooperates and other entities, a source with direct knowledge of the matter said on Wednesday.

** Meanwhile, Guo Shuqing, Chairman of the China Banking and Insurance Regulatory Commision (CBIRC), requested that commercial banks step up loan supply to private companies and small- and median-sized enterprises, in a bid to slash their funding costs and facilitate broad economic growth stability. ** Optimism over positive impact of these measures were offset by fears of persistent yuan depreciation, as perceived monetary easing could push down Chinese money rates, potentially making U.S. dollar assets more appealing.

** Air carriers, including China Southern, China Eastern and Air China, slumped as a weaker yuan makes their heavy dollar borrowings more costly.

** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.17 percent, while Japan’s Nikkei index closed down 0.13 percent. ** The largest percentage gainers on the main Shanghai Composite index were Weifang Yaxing Chemical Co Ltd, up 10.1 percent, followed by Jiangsu Yulong Steel Pipe Co Ltd gaining 10.03 percent and Hangzhou TianMuShan Pharmaceutical Enterprise Co Ltd, up by 10.02 percent. ** The largest percentage losers on the Shanghai index were Henan Oriental Silver Star Investment Co Ltd, down 10.01 percent, followed by Ningxia Xinri Hengli Steel Wire Rope Co Ltd losing 9.94 percent and Jiangsu New Energy Development Co Ltd down by 9.76 percent. ** As of 07:11 GMT, China’s A-shares were trading at a premium of 18.22 percent over the Hong Kong-listed H-shares. ** The Shanghai stock index is below its 50-day moving average and below its 200-day moving average. (Reporting by Shanghai Newsroom; Editing by Subhranshu Sahu)

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