China stocks ease ahead of key data; but set for weekly gains

Credit: REUTERS/© Aly Song / Reuters

China stocks edged lower on Friday as investors awaited cues for the country's industrial output data due later in the day, amid prospects of an escalation in the Sino-U.S. trade spat.

SSEC -0.3%, CSI300 -0.1%, HSI -0.5%, HSCE -0.3%

May industrial production, retail sales, investment data due 0700 GMT

A-shares set for weekly gains; sentiment up on policy support - Morgan Stanley

HONG KONG, June 14 (Reuters) - China stocks edged lower on Friday as investors awaited cues for the country's industrial output data due later in the day, amid prospects of an escalation in the Sino-U.S. trade spat.

** At the midday break, the Shanghai Composite index .SSEC was down 0.3% at 2,903.15 points, but up 2.7% so far this week. The blue-chip CSI300 index .CSI300 was down 0.1% on the day, but up 3.3% week-on-week.

** CSI300's financial sector sub-index .CSI300FS was flat, the consumer staples sector .CSI000912 was up 0.2%, the real estate index .CSI000952 climbed 0.9% and the healthcare sub-index .CSI300HC gained 0.7%.

** The smaller Shenzhen index .SZSC was down 0.6% and the start-up board ChiNext Composite index .CNT slipped 0.5%.

** China will release May industrial production along with retail sales and investment numbers at 0700 GMT. Economists polled by Reuters expect industrial production in China to have risen 5.5% in May from 5.4% in April and believe retail sales increased 8.1% from 7.2% the previous month. CNIO=ECI, CNRSL=ECI

** Expectations of more stimulus in China are growing as the trade dispute threatens to escalate into a full-blown trade war that could push the global economy into recession.

** U.S. President Donald Trump said this week he still plans to meet with Chinese President Xi Jinping later this month, but declined to set a deadline for levying tariffs on another $325 billion of Chinese goods.

** The Chinese stock market will likely be in holding pattern before clearer signals emerge in the trade talks, Kaiyuan Securities' analysts wrote in a memo on Friday. "The G20 meeting at the end of the month and follow-up talks in the Sino-U.S. trade dispute are still the events that would have the most impact on the market," they said.

** Morgan Stanely noted a recovery in sentiment in A-shares this week, driven by higher trading volume. "We believe the uptick in sentiment was also helped by the easing measures to boost infrastructure investment introduced by the Chinese government on June 10," the bank said in a note on Friday.

** Meanwhile, Chinese Vice Premier Liu He on Thursday also signalled step up support for the economy and keep ample liquidity in the financial system. A state newspaper reported this week that China is expected to adjust money and credit supply in coming weeks.

** In Hong Kong, the Hang Seng Index .HSI was down 0.5% at 27,153.63, while H-shares .HSCE fell 0.3%. The city returned to normal after heated protests against the controversial extradition legislation earlier this week.

** Around the region, MSCI's Asia ex-Japan stock index .MIAPJ0000PUS was weaker by 0.3%, while Japan's Nikkei index .N225 was up 0.3%.

** The largest percentage losses in the Shanghai index were Fujian Raynen Technology Co Ltd 603933.SS, down 8.2%, followed by Sichuan Furong Technology Co Ltd 603327.SS, losing 7.7% and Jiangsu Safety Wire Rope Co Ltd 603028.SS, down by 7.6%.

** As of midday, China's A-shares were trading at a premium of 27.02% over the Hong Kong-listed H-shares. .HSCAHPI

** The Shanghai stock index is below its 50-day moving average and above its 200-day moving average.

China stock market graphics suite

(Reporting by Noah Sin, Editing by Sherry Jacob-Phillips)

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