* SSEC -0.6%, CSI300 -1%; HSI -0.4%, at 3-month low
* Trade talks in limbo; Huawei hit by Google suspension
* PBOC sounds cautious policy tone, vows yuan stability
HONG KONG, May 20 (Reuters) - Shares in Mainland China and Hong Kong tumbled on Monday as trade tensions between Beijing and Washington protracted, with U.S. pressure on Chinese technology company Huawei intensifying. ** At the midday break, the Shanghai Composite index was down 0.6% at 2,865.25, while the blue-chip CSI300 index was down almost 1%. ** CSI300’s financial sector sub-index fell 0.3%, the consumer staples index plunged 1.9%, the real estate index fell 0.7% and the healthcare sub-index sank 1.8%. ** Chinese H-shares listed in Hong Kong fell 0.5%. The Hang Seng Index fell 0.4% to 27,827.32, its lowest level since Feb. 8. ** The smaller Shenzhen index was down 0.9% and the start-up board ChiNext Composite index was weaker by 0.6%. ** Amid persisting Sino-U.S. trade tensions, U.S. President Donald Trump said in an interview aired Sunday night his 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 trade war could be a risk to the world economic outlook if it is not resolved, International Monetary Fund Managing Director Christine Lagarde told Reuters on Friday. ** “Investors outside the market are largely observing, while those (invested) in the market have become less active. Market sentiments are not high, confidence is lacking,” said Chinese brokerage Founder Securities in a note on Monday. ** The People’s Bank of China said in its first-quarter policy implementation report that it would maintain a prudent monetary policy and fend off any systemic financial risks, and fine-tune its policy in line with changes in the economy and prices and work to improve its policy transmission mechanism. ** 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,” analysts at Goldman Sachs said in a memo on Monday. ** Shares in Huawei suppliers listed on the mainland and Hong Kong continued their slump, as worries deepened over the U.S. sanctions after a Reuters report said Google had suspended some business with Huawei. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.6% while Japan’s Nikkei index was up 0.3%. ** The largest percentage losers in the Shanghai index were Zhejiang Hugeleaf Co Ltd, Harbin High-Tech Group Co Ltd, and Shanghai Laiyifen Co Ltd - all down by 10%. ** As of midday, China’s A-shares were trading at a premium of 23.89% over the Hong Kong-listed H-shares. ** The Shanghai stock index is below its 50-day moving average and above its 200-day moving average.
Reporting by Noah Sin; editing by Gopakumar Warrier