China stocks test near 3-month lows amid Sino-U.S. spat

Credit: REUTERS/ALY SONG

Chinese shares extended falls on Friday, hitting their lowest in nearly three months, as worries mounted that relations with the United States could worsen further after two U.S. Navy warships sailed near islands claimed by China in the South China Sea.

SSEC -0.6%, CSI300 -0.8%, HSI +0.3%, HSCE +0.3%

U.S. warships sail in South China Sea this week

Trade spat still ongoing, deal may delay until next year

HONG KONG, Nov 22 (Reuters) - Chinese shares extended falls on Friday, hitting their lowest in nearly three months, as worries mounted that relations with the United States could worsen further after two U.S. Navy warships sailed near islands claimed by China in the South China Sea.

** Lingering doubts over the status of trade talks with Washington following U.S. backing for Hong Kong protesters weighed on the market as well.

** At the midday break, the Shanghai Composite index .SSEC was down 0.6% to 2,886.47, having recovered modestly from its lowest level since Aug. 30 hit earlier in the session. China's blue-chip CSI300 index .CSI300 was down 0.8%.

** CSI300's financial sector sub-index .CSI300FS fell 0.4%, the consumer staples sector .CSI000912 dropped 1.6%, and the real estate index .CSI000952 lost 0.5%.

** Chinese H-shares listed in Hong Kong .HSCE rose 0.3%. The Hang Seng Index .HSI gained 0.3% to 26,536.06.

** The smaller Shenzhen index .SZSC was down 1.2% and the start-up board ChiNext Composite index .CNT fell by 1.5%.

** U.S. Navy warships twice sailed near islands claimed by China in the South China Sea in the past few days, the U.S. military told Reuters on Thursday, at a time of heightened tension between the world's two largest economies.

** China's military confirmed on Friday that the two U.S. warships had sailed through the contentious waterways and urged the U.S. side to "stop these provocative actions to avoid any unforeseeable accidents".

** The market accumulated losses this week amid concerns that Beijing and Washington may not reach a deal to end their trade conflict until next year.

** China will strive to reach a "phase one" trade agreement with the United States as both sides keep communication channels open, the Chinese commerce ministry said on Thursday, in an attempt to allay fears talks might be unravelling.

** China needs to make better use of its various policy tools to boost the economy and lower real interest rates, Premier Li Keqiang said.

** Zhang Qi, an analyst with Haitong Securities in Shanghai, said negative news such as the bill on Hong Kong and the frictions in South China Sea weighed on the market.

** The U.S. Congress has passed legislation to back protesters in Hong Kong and threaten China with possible sanctions on human rights. President Donald Trump is expected to sign this into law in the coming days. ** Around the region, MSCI's Asia ex-Japan stock index .MIAPJ0000PUS was firmer by 0.1%, while Japan's Nikkei index .N225 was up 0.3%.

** By 0403 GMT, China's A-shares were trading at a premium of 27.60% over the Hong Kong-listed H-shares. .HSCAHPI

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

(Reporting by Luoyan Liu and John Ruwitch; Editing by Subhranshu Sahu)

((luoyan.liu@thomsonreuters.com; Reuters Messaging: luoyan.liu.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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