* SSEC -0.3 pct, CSI300 -0.3 pct, HSI -0.2 pct
* tougher financial regulation could pressure China
* Resources shares rebound on higher commodity prices
SHANGHAI, Feb 7 China stocks pulled back on
Tuesday morning on fresh signs the government was extending
steps to defuse potential credit bubbles in the broader economy,
reinforcing its recent tightening moves that have helped curb
Hong Kong shares were also hit by weak global markets.
China's CSI300 index and the Shanghai Composite
Index lost 0.3 percent each, to 3,362.30 points, and
3,147.20 points, respectively by the lunch break.
Buyers were cautious after state media reported on Tuesday
that China's central bank had sent out so-called "window
guidance" to some banks urging them to control their credit
quotas starting in February.
Moreover, the People's Bank of China (PBOC), which on Friday
unexpectedly raised short-term interbank rates, reaffirmed its
tightening bias by skipping open market operations for the third
straight session, citing "relatively high level" of liquidity in
the banking system.
"We believe strengthening financial regulations remain a
near-term downside risk to the A-share market," wrote Gao Ting,
head of China strategy at UBS Securities.
Further deleveraging by the government "could put pressure
on the A-share market," Gao said. UBS has a "neutral" view on
Nearly all sectors were down in China, with energy
and infrastructures shares leading the
Material stocks rose on the back of a rebound in
In Hong Kong, the Hang Seng index dropped 0.2
percent, to 23,310.59 points, while the Hong Kong China
Enterprises Index was unchanged at 9,836.91.
The downside pressure was limited by rising capital inflows
through the Shanghai-Hong Kong Stock Connect scheme. Chinese
investors used over 17 percent of the daily quota in the
previous session, compared with an average of nearly 11 percent
Linus Yip, strategist at First Shanghai Securities Ltd, said
"we still need to have a close watch on that for a while, to see
if the trend is sustainable.
Energy sectors fell, down 0.7 percent in China
and 0.8 percent in Hong Kong, as oil prices
remained under pressure after losing nearly 2 percent on Monday.
But resource stocks were among the best performers in both
markets, with sentiment lifted by a firm commodity market.
Shares in companies related to the missing Chinese-born
billionaire Xiao Jianhua renewed their falls as Xiao's
whereabouts remained unclear.
(Reporting by Jackie Cai and John Ruwitch; Editing by Shri