May 16, 2017 / 5:21 AM / 2 months ago

China stocks slip, c.bank injection partially offsets regulation worries

2 Min Read

* SSEC -0.3 pct, CSI300 -0.1 pct, HSI -0.3 pct

* China banking regulator tightens rules on WMPs

* China c.bank injects net 170 bln yuan, the most in nearly 4 mths

SHANGHAI, May 16 (Reuters) - China stocks capped off Tuesday morning on a weaker footing as worries about fresh moves to restrict shadow banking were only partially offset by a generous injection of cash by the central bank apparently aimed at easing liquidity stress.

The CSI300 index fell 0.1 percent, to 3,396.65 points at the end of the morning session, while the Shanghai Composite Index lost 0.3 percent, to 3,079.74 points.

Late on Monday, China's banking regulator tightened disclosure rules on lenders' wealth management products (WMPs) in its latest move to curb shadow banking and risky investments.

Separately, the China Banking Regulatory Commission (CBRC) unveiled plans to publish a flurry of regulations later this year to control financial risks.

On the trading floor, however, concerns over tighter regulations that have knocked the market recently were partly offset by signs the government is moving to keep the economy well funded.

On Tuesday, China's central bank injected a net 170 billion yuan ($24.67 billion) into money market through open market operations - the most in nearly four months - to offset liquidity stress caused by corporate tax payment and maturing repos.

Analysts say the market is likely to stabilize after staying in the red for five consecutive weeks as regulators try not to go too hard in their quest to curb debt risks.

"The market is increasingly likely to stabilize," Li Chao, analyst at Huatai Securities wrote.

"If the market misunderstands policy intentions and continues to fall, there will be more soothing remarks from government agencies."

Sector performance was mixed.

Banking and infrastructure stocks fell while consumer and healthcare shares rose.

In Hong Kong, the Hang Seng index dropped 0.3 percent, to 25,308.29 points, while the Hong Kong China Enterprises Index lost 0.6 percent, to 10,389.25.

Reporting by Samuel Shen and John Ruwitch; Editing by Shri Navaratnam

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