China stocks slip from 2-yr highs as traders book profits; HK dips

China and Hong Kong stocks shed early gains on Tuesday, as investors locked in profits from a rally underpinned by optimism ahead of a Sino-U.S. trade deal and as key data showed signs of moderate stabilization in the world's second-largest economy.

** The CSI300 index rose as much as 0.5% to a near two-year high, before falling 0.1% to 4,200.66 points at the end of the morning session, while the Shanghai Composite Index lost 0.1% to 3,113.96 points. ** The CSI300 index climbed 7% in December and 2.5% so far in the first month of 2020.

** The stock market had been performing quite well recently, though it now faces pressure of a correction with expectations for a Sino-U.S. trade deal gradually factored in, analysts at China Galaxy Securities said in report. ** The U.S. Treasury Department on Monday dropped its designation of China as a currency manipulator, days before top officials of the world's two largest economies were due to sign a preliminary trade agreement to ease an 18-month-old tariff war.

** China's exports in December rose 7.6% from last year, customs data showed on Tuesday, signalling a modest recovery in demand as a preliminary trade deal with the United States raised hopes that a prolonged tariff war will be de-escalated. ** In Hong Kong, the benchmark Hang Seng Index opened up 0.7% before dropping 0.2% to 28,901.93 points by noon, while the Hong Kong China Enterprises Index lost 0.2% to 11,373.55.

** It's quite understandable to see some profit-taking following recent strong gains, said Linus Yip, an analyst with First Shanghai Securities, while expressing optimism about Hong Kong market in 2020 due to the easing of Sino-U.S. trade tensions and signs of stabilization in China's economy. ** Hong Kong's chief executive Carrie Lam and top finance officials praised the Chinese-ruled city's resilience as a global financial hub on Monday amid more than six months of often violent pro-democracy unrest.