June 27, 2018 / 4:22 AM / 5 months ago

China, Hong Kong stocks fall on trade fears, falling yuan

* SSEC -0.5 pct, CSI300 -1.2 pct, HSI -0.6 pct

* HK->Shanghai Connect daily quota used 0.1 pct, Shanghai->HK daily quota used 0.7 pct

* FTSE China A50 -1.3 pct, BNY Mellon ADR China Select Index +0.7 pct

SHANGHAI, June 27 (Reuters) - China and Hong Kong stocks fell on Wednesday and looked set to post their third straight session of decline, amid lingering trade war fears and a depreciating yuan. ** The CSI300 index fell 1.2 percent, to 3,490.35 points, at the end of the morning session, while the Shanghai Composite Index lost 0.5 percent, to 2,831.58 points. ** The Hang Seng index dropped 0.6 percent, to 28,713.80 points, while the Hong Kong China Enterprises Index lost 1.0 percent, to 11,007.42. ** There were few signs of easing trade tensions between the United States and China. ** The U.S. House of Representatives overwhelmingly passed a bill on Tuesday to tighten foreign investment rules, spurred by bipartisan concerns about Chinese bids to acquire sophisticated U.S. technology. ** U.S. President Donald Trump on Tuesday endorsed Treasury Secretary Steven Mnuchin’s measured approach to restricting Chinese investments in U.S. technology companies, saying a strengthened merger security review committee could protect sensitive American technologies. ** Two U.S. senators urged Trump on Tuesday to reconsider his agreement with ZTE Corp, saying lifting a ban on China’s second-largest telecommunications maker poses “a significant threat” to national security. ** That raised fears of ZTE’s fate, whose shares were down 3.2 percent in Shenzhen and 2.3 percent in Hong Kong by the lunch break. ** Adding to worries was a weakening yuan, with real estate and airline shares continuing to lead the decline, both on the mainland and Hong Kong. ** China’s central bank lowered its yuan midpoint for the sixth straight trading day on Wednesday, to the weakest in six months, reflecting sharp losses in the currency a day earlier amid rising trade tensions between Beijing and Washington. ** China would be better off weakening its currency rather than selling its vast holdings of U.S. government debt in response to a growing trade conflict between the world’s two biggest economies, according to simulations by Goldman Sachs strategists. ** However, investors worried a depreciating yuan could trigger capital outflows that would in turn weigh on assets prices, and could push up costs for domestic airlines with dollar-denominated debts. ** An index tracking major developers on the mainland tumbled 3 percent to a nine-month low, while the property index in Hong Kong plumbed a near five-month low. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.32 percent, while Japan’s Nikkei index was down 0.29 percent . ** The yuan was quoted at 6.5943 per U.S. dollar, 0.22 percent weaker than the previous close of 6.5797. ** The largest percentage gainers on the main Shanghai Composite index were Jiangsu Hongdou Industrial Co Ltd, up 10.15 percent, followed by Huafang Co Ltd gaining 10.03 percent and Guangdong Dcenti Auto-Parts Stock Ltd Co , up by 10.01 percent. ** The largest percentage losers on the Shanghai index were China United Travel Co Ltd, down 10.04 percent, followed by Nanjing Xinjiekou Department Store Co Ltd losing 10.02 percent and Fujian Start Group Co Ltd , down by 10 percent. ** The top gainers among H-shares were CNOOC Ltd, up 4.93 percent, followed by PetroChina Co Ltd gaining 1.75 percent and Shenzhou International Group Holdings Ltd , up by 1.72 percent. ** The three biggest H-shares percentage decliners were Air China Ltd, which has fallen 4.84 percent, Great Wall Motor Co Ltd, which has lost 4.0 percent, and China Vanke Co Ltd, down by 3.8 percent. ** About 6.98 billion shares have traded so far on the Shanghai exchange, roughly 51.9 percent of the market’s 30-day moving average of 13.45 billion shares a day. The volume traded was 12.59 billion as of the last full trading day. ** As of 04:04 GMT, China’s A-shares were trading at a premium of 18.82 percent over the Hong Kong-listed H-shares.

Reporting by Luoyan Liu and John Ruwitch; Editing by Subhranshu Sahu

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