China stocks extend fall as stimulus hopes dwindle

Stocks in China fell for a second straight session on Thursday after the country kept a key interest rate steady, compounding expectations that Beijing will limit further stimulus. ** China kept its benchmark lending rate for corporate and household loans steady, as expected, for the fourth straight month at its August fixing on Thursday.

Stocks in China fell for a second straight session on Thursday after the country kept a key interest rate steady, compounding expectations that Beijing will limit further stimulus. ** At the midday break, the Shanghai Composite index was down 1.1% at 3,371.48 points. ** China's blue-chip CSI300 index was down 1.3%, with its financial sector sub-index lower by 1.4%, the real estate index down 0.6% and the healthcare sub-index down almost 1%. ** Chinese H-shares listed in Hong Kong fell 2% while the Hang Seng Index was down 2.1% at 24,662.71. ** The smaller Shenzhen index and the start-up board ChiNext Composite index both fell 1.1%, while Shanghai's tech-focused STAR50 index lost 1.5%​. ** China kept its benchmark lending rate for corporate and household loans steady, as expected, for the fourth straight month at its August fixing on Thursday. ** The print came after premier Li Keqiang stressed last week that China would not resort to a flood-like stimulus.

** Chinese A-shares were dragged down by expectations that interest rates will not go any lower, said Steven Leung, a Hong Kong-based executive director at UOB Kay Hian. ** "The market is worried about there may not be more much liquidity to come," he added. ** Several Federal Reserve policymakers sounded downbeat on the U.S. economy, warning that more easing might be need as a rebound in employment was already slowing.

** Around the region, MSCI's Asia ex-Japan stock index was weaker by 1.7% while Japan's Nikkei index was down almost 1%. ** The yuan was 0.04% weaker at 6.9220 per U.S. dollar at 0422 GMT. ** So far this year, the Shanghai stock index is up 10.5%, while the CSI300 is up 14.3%. Shanghai stocks have risen 1.9% this month.