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China shares close at lowest since early 2009, pull down Hong Kong

Source : REUTERS
Last Updated: Thu, Sep 20, 2012 14:10 hrs

(Updates to close)

* HSI down 1.2 pct as weak China factory data weighs

* H-shares -1.4 pct, CSI300 -2.2 pct, Shanghai Comp -2.1 pct

* Sliding oil prices hit Chinese oil majors, lift airliners

* China Unicom hit by underwhelming new subscriber additions

By Clement Tan

HONG KONG, Sept 20 (Reuters) - Mainland Chinese shares sank to their lowest levels since early 2009 on Thursday, pinning Hong Kong markets back, after a survey showed the rate of the slowdown in China's manufacturing activity was stabilising, dousing hopes for imminent policy easing.

The HSBC Flash China manufacturing purchasing managers' index indicated an 11th month of contraction, but ticked up to 47.8 from a nine-month low of 47.6 in August, while pointing to a broad steadying across most sub-indexes.

However, there was little cause for premature cheer as the sub-index covering output fell to 47.0, its lowest since November.

Still it was enough to douse hopes that Beijing would follow the Bank of Japan, the European Central Bank and the U.S. Federal Reserve in easing monetary policy in the near term.

"Data would probably need to be much worse than this for Beijing to cut interest rates or reserve requirements for banks with the 18th National Party Congress round the corner," said Alan Lam, Julius Baer's Greater China equity analyst.

The People's Bank of China utilised its 28-day reverse repo on Thursday only for the third time to inject $25.4 billion into onshore money markets, in a further sign that the central bank is holding off on further cuts in banks' reserve requirements.

The CSI300 Index of the top Shanghai and Shenzhen listings shed 2.2 percent to 2,196 points, its lowest close since March 2009. The losses took the CSI300 below chart support at about 2,199.9, which had served as strong support in late August.

The Shanghai Composite Index dived 2.1 percent in bourse volume that climbed almost 30 percent from Wednesday.

Both mainland indices have now dived more than 5 percent from Sept 10 high, completely reversing gains from a stimulus-led rally after Chinese media reported a raft of infrastructure project approvals on Sept. 6 and 7.

The Hang Seng Index and the China Enterprises Index of the top Chinese listings shed 1.2 and 1.4 percent respectively, but held onto the gains from the Chinese stimulus and the Fed's third round of quantitative easing, ending Thursday at around last Friday's levels.

Hong Kong turnover sank more than 17 percent from Wednesday.

Chinese energy majors were major drags on indices in both markets as global oil prices skidded. CNOOC Ltd slumped 3.5 percent to its lowest this week.

Airlines conversely rose on the prospect of lower fuel prices. In Hong Kong, Cathay Pacific gained 0.8 percent, while Air China rose 1.1 percent.

CHINA PLAYS IN FOCUS

The weak A-share market hit Chinese brokerages and insurance companies, seen as proxies for onshore Chinese markets because of their large investment and involvement. The CSI300 Index is now down 5.2 percent this week, set for its fifth weekly loss in six.

Haitong Securities shed 2.3 percent in Shanghai and 3.2 percent in Hong Kong. Citic Securities fell 1.2 percent in Shanghai and 2.5 percent in Hong Kong.

China Life Insurance slid 1.5 percent in Hong Kong and 2 percent in Shanghai, Ping An Insurance declined 1.5 percent in Hong Kong and 1.4 percent in Shanghai.

China Unicom, the second-largest mobile operator in the mainland, slumped 5.2 percent in Hong Kong to a two-week low after the company posted underwhelming new August subscriber numbers. (Editing by Kim Coghill) (clement.tan@thomsonreuters.com; +852 2843-6392; Reuters Messaging: clement.tan.thomsonreuters.com@reuters.net)




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