China, Hong Kong share edge low amid US-Europe trade war

China and Hong Kong stocks retreated on Thursday, as escalating U.S.-European trade tensions added to worries over the global economic outlook. The CSI300 index fell 2 per cent to 4,004.91 at the end of the morning session, while the Shanghai Composite Index lost 1.4 per cent to 3,197.89. ** The Hang Seng index dropped 0.9 per cent to 29,841.01, while the Hong Kong China Enterprises Index lost 1.1 per cent to 11,629.90.

** In a fresh escalation of trade tensions, U.S. President Donald Trump has threatened new tariffs on goods from the European Union even as the Sino-U.S. trade dispute remains unresolved. ** ECB President Mario Draghi raised the prospect of more support for the struggling euro zone economy on Wednesday if its slowdown persisted, saying the central bank had "plenty of instruments" with which to react.

** That came after IMF's warning that the global economy was slowing more than expected and a sharp downturn could require world leaders to coordinate stimulus. ** China's factory-gate inflation picked up for the first time in nine months in March, edging away from the deflationary territory, in a fresh sign that government efforts to boost the economy may be starting to revitalise domestic demand.

** But analysts urge caution, saying it will take a few more months of better data and further policy support from Beijing to see if a recovery can be sustained. ** On the mainland, sectors sank across the board, led by consumer firms which had seen robust gains this year.

** The CSI300 consumer staples index slumped 3.6 per cent, still having gained more than 50 per cent this year. ** For the medium to long term, the A-share market will remain rangebound, and significant corrections could not be ruled out if in particular policy support fails to meet expectations or in case of unfavourable changes in external environments, Shanxi Securities wrote in a report.

** The market calls for the support of fundamentals, while the bottom of corporate earnings is yet to be determined as the economy is still in a downward trend, the brokerage added. ** Around the region, MSCI's Asia ex-Japan stock index lost 0.51 per cent while Japan's Nikkei index was unchanged.

** The yuan was quoted at 6.7151 per U.S. dollar, 0.01 per cent firmer than the previous close of 6.7158. ** The largest percentage gainers in the main Shanghai Composite index were DongFeng Automobile Co Ltd, up 10.07 per cent, followed by Dongfang Electric Corp Ltd, gaining 10.04 per cent and Sichuan Golden Summit Group Joint Stock Co Ltd, up by 10.04 per cent.

** The largest percentage losers in the Shanghai index were Lily Group Co Ltd, down 9.99 per cent, followed by Zhejiang Shengda Bio-Pharm Co Ltd, losing 9.31 per cent and Shandong Shida Shenghua Chemical Group Co Ltd, down by 8.78 per cent. ** So far this year, the Shanghai stock index is up 29.99 per cent, while China's H-share index is up 16.2 per cent. Shanghai stocks have risen 4.89 per cent this month.

** The top gainers among H-shares were Dongfeng Motor Group Co Ltd, up 1.04 per cent, followed by Tencent Holdings Ltd, gaining 0.77 per cent. ** The three biggest H-shares percentage decliners were Haitong Securities Co Ltd, which has fallen 3.77 per cent, Air China Ltd, which has lost 3.6 per cent and China Vanke Co Ltd, down by 3.3 per cent.

** About 21.99 billion shares have traded so far on the Shanghai exchange, roughly 52.5 per cent of the market's 30-day moving average of 41.93 billion shares. The volume traded was 38.01 billion as of the last full trading day. ** As of 04:17 GMT, China's A-shares were trading at a premium of 25.23 per cent over the Hong Kong-listed H-shares.

(With inputs from agencies.)