SHANGHAI China stocks fell on Wednesday, with the country's leading "nifty 50" stocks posting their worst day in six months, as weak investment data reinforced views that the world's second-largest economy will start to lose some momentum in coming months.
Trading was thin, however, as investors awaited a likely U.S. interest rate hike later in the session and debated whether China's central bank would follow with modest tightening of its own, as it did in March.
The blue-chip CSI300 index fell 1.3 percent to 3,535.30 points, while the Shanghai Composite Index closed down 0.7 percent at 3,130.67.
The Shanghai SE 50 Index, dubbed China's "nifty 50" index, slumped 1.5 percent in its worst day since mid-December, as investors took profits in blue-chips which had far outperformed the broader market in the past months.
Investors also dumped stocks - mainly big-caps - that are partly-owned by Anbang Insurance Group, after the acquisitive company said late on Tuesday its chairman Wu Xiaohui was no longer able to fulfil his duties.
Hours earlier, Chinese magazine Caijing reported that Wu had been taken away for investigation.
Anbang-invested shares - including Financial Street Holdings, China Vanke, China Merchants Shekou, Gemdale and China State Construction Engineering - all dropped sharply.
Confidence was further dented by data that showed fixed asset investment grew more slowly than expected in the first five months of the year, while the pace of new construction starts decelerated sharply in May.
That weakness, if sustained, suggests a cooling in China's economic growth in coming months, though industrial output and retail sales are holding up better than expected and cushioning a broader slowdown.
"Given the recent data, we are almost certain to see a continued slowdown in the second half of 2017 and 2018," wrote Larry Hu, analyst at Macquarie Capital Ltd.
"Reflation has become disinflation. Inventory stocking has turned into destocking. Property is entering a downcycle."
Main sectors fell across the board, led by real estate and banking stocks.
(Reporting by Luoyan Liu and John Ruwitch; Editing by Kim Coghill)