China blue-chip index slips from 2-year high on profit-taking

SHANGHAI, Jan 14 (Reuters) - China stocks shed early gains on Tuesday as investors booked profits from the rally underpinned by optimism ahead of the signing of Phase 1 trade deal between Washington and Beijing.

** The blue-chip CSI300 index rose as much as 0.5% to a near two-year high before ending 0.3% lower at 4,189.89. The Shanghai Composite Index eased 0.3% to 3,106.82.

** The CSI300 index climbed 7% in December and has gained 2.3% so far this year.

** The stock market had been performing quite well recently, though it now faces pressure of a correction with expectations of the Sino-U.S. trade deal gradually factored in, analysts at China Galaxy Securities said in report.

** The U.S. Treasury Department on Monday dropped its designation of China as a currency manipulator, days before top officials of the world’s two largest economies were due to sign a preliminary trade agreement to ease an 18-month-old tariff war.

** China has pledged to buy nearly an additional $80 billion of manufactured goods from the United States over the next two years, plus over $50 billion more in energy supplies, according to a source briefed on a trade deal to be signed on Wednesday.

** China’s exports rose for the first time in five months in December and by more than expected, though market reaction to the data was muted as signs of modest recovery in the world’s second largest economy have been widely noted and behind the recent strong rally in the A-share market.

** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.11%, while Japan’s Nikkei index closed up 0.73%.

** By 0720 GMT, the yuan was quoted at 6.8865 per U.S. dollar, 0.09% firmer than the previous close of 6.8925.

** By 0721 GMT, China’s A-shares were trading at a premium of 27.31% over the Hong Kong-listed H-shares. (Reporting by Shanghai Newsroom; editing by Uttaresh.V)