China stocks retreat as steep factory price slump weighs; HK rises

China stocks retreated on Tuesday, snapping their week-long winning streak after data showed country's factory-gate prices had shrunk at the sharpest pace in three years in August, reinforcing the urgency for Beijing to step up stimulus.

** The CSI300 index was down 0.6% at 3,950.30 points at the end of the morning session, while the Shanghai Composite Index slipped 0.4% to 3,013.71 points. ** Analysts say flagging demand at home and abroad is forcing some Chinese businesses to slash prices to win new orders or cut output to contain costs, chipping away at already-lean profits and further dampening business confidence.

** U.S. Treasury Secretary Steven Mnuchin on Monday said he did not see the threat of a recession as the Trump administration seeks to revive trade negotiations with China, adding that he expected a positive year ahead for the U.S. economy. ** China stocks were less sensitive to the changes in the Sino-U.S. trade situation after ups and downs in the past, while market participants might only embrace limited optimism for the results of their October negotiations, analysts at AVIC Securities said in a report.

** Besides investors could incline to book profits following a recent strong rally, even as the benchmark Shanghai index reached the key 3,000-point level, seen as a strong resistance since May when markets tumbled after Trump threatened fresh tariffs. ** In Hong Kong, the Hang Seng index added 0.1% to 26,703.58 points, while the Hong Kong China Enterprises Index was unchanged at 10,413.89 points.

** An escalation of violence cannot solve social issues in Hong Kong, the leader of the Chinese-ruled city, Carrie Lam, said on Tuesday, adding that she deeply regretted interference by foreign parliaments in the Asian financial hub's matters. ** Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.29% while Japan's Nikkei index was up 0.26%.

** The yuan was quoted at 7.1162 per U.S. dollar, 0.07% firmer than the previous close of 7.121. ** The largest percentage gainers in the main Shanghai Composite index were Harbin High-Tech Group Co Ltd, which gained 10.02%, followed by Kingfa Sci & Tech Co Ltd, gaining 10.01% and Super Telecom Co Ltd, up by 10.01%.

** The largest percentage losses in the Shanghai index were China National Software & Service Co Ltd, which dropped 8.41%, followed by Guangdong Ellington Electronics Technology Co Ltd, losing 5.66% and Hefei Metalforming Intelligent Manufacturing Co Ltd, down by 5.22%. ** So far this year, the Shanghai stock index gained 21.29%, while China's H-share index rose 2.9%. Shanghai stocks have risen 4.8% so far this month.

** The top gainers among H-shares were China Telecom Corp Ltd, up 3.62%, followed by CITIC Ltd, gaining 2.99% and China Petroleum & Chemical Corp, up by 2.78%. ** The three biggest H-shares percentage decliners were ANTA Sports Products Ltd, which has fallen 2.38%, ENN Energy Holdings Ltd, which has lost 2.3% and China Merchants Bank Co Ltd, down by 2.0%. As of 04:15 GMT, China's A-shares were trading at a premium of 29.67% over the Hong Kong-listed H-shares.

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