China stocks falls amid lean domestic demand

Adding to worries was an S&P Global rating report that said off-balance-sheet borrowings by Chinese local governments could be as high as 40 trillion yuan ($5.78 trillion).

China stocks reversed early gains to end lower on Tuesday, after data showed factory-gate inflation had cooled for a third straight month in September amid lean domestic demand, reflecting more pressure on the world's second-biggest economy.

The blue-chip CSI300 index ended 0.8 weaker at 3,100.97 points, while the Shanghai Composite Index also closed 0.8 per cent lower at 2,546.33 points.

Most sectors lost ground, led by real estate and material firms.

China's factory-gate inflation cooled for a third straight month in September amid ebbing domestic demand, pointing to more pressure on the world's second-biggest economy as it remains locked in an intensifying trade war with the United States.

Adding to worries was an S&P Global rating report that said off-balance-sheet borrowings by Chinese local governments could be as high as 40 trillion yuan ($5.78 trillion) and amount to "a debt iceberg with titanic credit risks".

There were also worries over the increasing tension between Saudi Arabia and the West that have fanned geopolitical concerns. Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.08 per cent, while Japan's Nikkei index closed up 1.25 per cent.

At 0705 GMT, the yuan was quoted at 6.9247 per U.S. dollar, 0.09 per cent weaker than the previous close of 6.9185. The largest percentage gainers in the main Shanghai Composite index were Guirenniao Co Ltd, which ended 10.09 per cent firmer, followed by Shanghai Laimu Electronics Co Ltd, which closed up 10.04 per cent and YanTai Yuancheng Gold Co Ltd, which closed 10.02 per cent higher.

The largest percentage losses in the Shanghai index were Shanghai Hongda Mining Co Ltd, which ended down 10.06 per cent, followed by Joincare Pharmaceutical Group Industry Co Ltd, which closed 10.05 per cent weaker and Shanghai Material Trading Co Ltd, which ended 10.02 per cent down.

So far this year, the Shanghai stock index is down 23 per cent, the CSI300 dropped 23.1 per cent, while China's H-share index listed in Hong Kong fell 13.3 per cent. Shanghai stocks have declined 9.75 percent this month. As of 0706 GMT, China's A-shares were trading at a premium of 22.82 per cent over the Hong Kong-listed H-shares.

The Shanghai stock index is below its 50-day moving average and below the 200-day moving average. The price-to-earnings ratio of the Shanghai index was 10.98, as of last trading day, while the dividend yield was 2.9 per cent.

(With inputs from agencies.)