Chinese stocks fall as market cautious on Sino-US talks

China stocks fell on Friday morning led by financial shares, as the market's rally showed signs of fatigue ahead of a fresh round of Sino-U.S. talks next week. Hong Kong's benchmark Hang Sang also dipped, dragged by index benchmark Tencent Holdings following the company's lacklustre earnings. The CSI300 index fell 1.0 per cent to 3,798.76 points at the end of the morning session, but the gauge was still up 1.4 per cent on a weekly basis. The Shanghai Composite index lost 0.8 per cent, to 3,077.56 points, and is up 1.8 per cent so far this week.

The Hang Seng index dropped 0.5 per cent to 28,913.55 points, while the Hong Kong China Enterprises Index lost 0.9 per cent to 11,444.43. With hopes for a Sino-U.S. trade deal largely priced in, news of a new round of trade talks failed to excite the market. A U.S. trade delegation headed by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will visit China on March 28-29 for the next round of negotiations, China's commerce ministry said on Thursday.

In Hong Kong, the sentiment was soured by a second-day drop in Tencent. Tencent Holdings signalled it will reduce its reliance on gaming in China, where a regulatory review and one-off investment costs led to its sharpest-ever quarterly profit drop and slowest annual profit growth in 13 years. China's CSI300 financial sector sub-index was lower by 1.38 per cent while the healthcare sub-index fell 0.26 per cent.

The smaller Shenzhen index was down 1.09 per cent while the start-up board ChiNext Composite index was weaker by 1.89 per cent. Around the region, MSCI's Asia ex-Japan stock index was barely changed while Japan's Nikkei index was down 0.12 per cent. The yuan was quoted at 6.7036 per U.S. dollar, 0.06 per cent weaker than the previous close of 6.6998.