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China: Stocks edge higher after previous day's rout

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[SHANGHAI] Chinese shares edged higher on Tuesday following the biggest one-day plunge for China's major stock indexes in more than three years, as investors looked to Beijing for signs of more support for the economy.

At the midday break, the Shanghai Stock Exchange Composite Index was up 0.32 per cent at 2,915.87, after plunging 5.6 per cent on Monday.

China's blue-chip CSI 300 Index rose 0.77 per cent after Monday's 5.8 per cent drop. Its financial sector sub-index was lower by 0.23 per cent, the consumer staples sector was up 2.13 per cent, the real estate index was up 2.15 per cent and the healthcare sub-index added 1.7 percent.

Monday's stock market plunge had been sparked by tweets from US President Donald Trump that he would raise tariffs on US$200 billion worth of Chinese goods to 25 per cent from 10 per cent by the end of the week, and would "soon" target the remaining Chinese imports with tariffs. Senior US officials said that China has backtracked on commitments it made during trade talks.

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On Monday, a Chinese Foreign Ministry spokesman said that China's trade negotiation team is "preparing to go to the United States for the discussions".

Analysts at Dongguan Securities said in a note: "The foreign ministry's statement has helped to alleviate some of the market's concerns over China-US talks." While noting positive factors including robust data, "increased uncertainty in Sino-US trade negotiations will still have an impact on the market", they said.

The analysts also highlighted a move by China's central bank to cut reserve requirement ratios for some small and medium-sized banks to help smaller companies struggling amid tougher economic conditions.

A sub-index tracking agriculture shares rose 3.07 per cent. Some agriculture firms had rallied on Monday amid expectations that domestic agriculture firms could benefit if Beijing retaliated against higher US tariffs.

Chinese H-shares listed in Hong Kong fell 0.07 per cent to 11,225.41, while the Hang Seng Index was up 0.16 per cent at 29,257.23.

The smaller Shenzhen index was up 1.47 per cent and the start-up board ChiNext Composite Index rose 0.89 per cent.

round the region, MSCI's Asia ex-Japan stock index gained 0.25 per cent while Japan's Nikkei index slipped 1.51 per cent.

The yuan was quoted at 6.7769 per US dollar, 0.22 per cent weaker than the previous close of 6.7622.

The largest percentage gainers in the main Shanghai Composite index were Harbin High-Tech Group, up 10.1 per cent, followed by Jinjian Cereals Industry, gaining 10.08 per cent, and Apple Flavor & Fragrance Group, up by 10.04 per cent. 

The largest percentage losers in the Shanghai index were Kangmei Pharmaceutical, down 10.01 per cent, followed by TVZone Media, losing 10 per cent and Ningbo Tianlong Electronics, down by 9.99 per cent.

So far this year, the Shanghai stock index is up 16.54 per cent, while China's H-share index is up 11.0 per cent. Shanghai stocks have declined 5.58 per cent this month.

The top gainers among H-shares were China Gas Holdings, up 2.89 per cent, followed by CNOOC, gaining 2.67 per cent and Anhui Conch Cement, up by 2.11 per cent.

The three biggest H-shares percentage decliners were Huatai Securities, which has fallen 1.46 per cent, China Life Insurance, which has lost 1.4 per cent and Dongfeng Motor Group, down by 1.4 per cent.

In Hong Kong, the sub-index of the Hang Seng index tracking energy shares rose 1 per cent while the IT sector was flat. The top gainer on the Hang Seng was CNOOC, up 2.67 per cent, while the biggest loser was AAC Technologies Holdings, which was down 1.51 per cent.

REUTERS