May 20, 2019 / 8:06 AM / 3 months ago

China stocks extend losses on trade crossfire

* Shanghai shares down 0.4%, blue-chips down 0.9%

* Huawei hit by Google suspension; Trump boasts tariff impact

* Chinese cenbank vows stability in yuan, fine-tune of policy

HONG KONG, May 20 (Reuters) - The Chinese stock market ended lower on Monday as trade tensions between China and the United States dragged on, with the focus being fixed on the sticking point of technology transfer. ** At the close, the Shanghai Composite index was down 0.4% at 2,870.60, while the blue-chip CSI300 index was lower by 0.9%. ** CSI300’s financial sector sub-index closed lower by 0.1%, the consumer staples sector was down 2.3%, the real estate index fell 0.7%, and the healthcare sub-index declined 1.9%. ** The smaller Shenzhen index ended down 0.8% and the start-up board ChiNext Composite index was weaker by 0.6%. ** U.S. President Donald Trump said in an interview aired on Sunday night that the tariffs on Chinese goods were causing companies to move production out of China to Vietnam and other countries in Asia. ** China has recently struck a sterner tone in its rhetoric, suggesting that a resumption of talks, aimed at ending the 10-month trade war between the world’s two largest economies, was unlikely to happen soon. ** The People’s Bank of China said, in its first-quarter policy implementation report, that it would fine-tune its policy in line with changes in the economy and prices. The report “seemed to send a less dovish tone for monetary policy, with the balance between growth stability and financial stability tilted a bit to the latter,” Goldman Sachs said in a memo on Monday. ** Further support from China’s policymakers will likely be on hold until the Chinese and U.S. leaders meet at the G20 summit in Japan in June, Huatai Securities wrote in a note on Monday. ** China’s yuan bounced from a 5-1/2-month low against the U.S. dollar hit last week, after the Chinese central bank said it will maintain basic stability of the yuan exchange rate. Reuters learnt on Friday that the PBOC intends to defend the yuan from weakening past the widely-watched 7 per dollar handle in the near term. ** Shares of Huawei’s suppliers listed on the mainland and Hong Kong fell in morning trade, as worries deepened over the U.S. sanctions after a Reuters report said Google had suspended some business with Huawei. ** Cases of European firms forced to transfer technology in China are increasing despite Beijing saying the problem does not exist, a European business lobby said, adding that its outlook on the country’s regulatory environment is “bleak”. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.6%, while Japan’s Nikkei index closed up 0.2%. ** So far this year, the Shanghai stock index is up 15.1% and the CSI300 has risen 20.2%. Shanghai stocks have declined 6.8% this month. ** About 20.95 billion shares were traded on the Shanghai exchange. The volume in the previous trading session was 26.63 billion. ** The Shanghai stock index is below its 50-day moving average and above its 200-day moving average. (Reporting by Noah Sin; editing by Uttaresh.V)

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