China: Stocks close at 3-month lows after slower service sector activity

[SHANGHAI] China stocks extended losses on Thursday to close at three-month lows, after a survey showing softer services sector activity raised concerns over growing economic risks.

The blue-chip CSI300 index fell 0.3 per cent, to 3,404.39 points, while the Shanghai Composite Index also closed down 0.3 per cent at 3,127.37 points.

Growth in China's services sector cooled to its slowest in almost a year in April as fears of slower economic growth dented business confidence, even as cost pressures eased, a private survey showed on Thursday.

The findings echoed a similar trend of slowing growth seen in China's official factory and services surveys on Sunday.

"A turning point in growth appeared to have emerged at the beginning of the second quarter. Investors should be cautious about downward risks in the economy," Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said in a note.

Further curbing sentiment, the securities regulator on Wednesday vowed to step up efforts to prevent and control financial risks ahead of a key Party Congress later this year.

Participants had already been rattled by tougher regulations recently to dampen market speculation, but Liu Qihao, an analyst with Shanghai Securities, said chances for a major downturn in the main indexes were low.

Most sectors lost ground, led by material and energy stocks, dragged down by an across-the-board sell-off in the commodities market.

Bank stocks continued to weigh on the market, with an index tracking the nation's major lenders closing at a near nine-month low.

REUTERS