China stocks fall after lending data tumbles
SHANGHAI, Aug 14 (Reuters) -China stocks slipped on Wednesday after data showed the country's banks' lending tumbled more than expected in July, while trading volume remained thin, underscoring fragile investor sentiment.
China's CSI 300 Index .CSI300 declined 0.5% and the Shanghai Composite Index .SSEC lost 0.4% by the midday break, with both lingering around their lowest level in half a year.
The weakness comes even as Asian shares rose and the dollar nursed losses after soft U.S. producer prices data stirred hopes that consumer price inflation would be benign, sending bond yields lower.
Chinese banks extended 260 billion yuan ($36.28 billion) in new yuan loans in July, down nearly 88% from June and missing analysts' forecasts, according to data released by the People's Bank of China (PBOC) on Tuesday.
The lending hit a near 15-year low, dragged down by tepid credit demand and seasonal factors and raising expectations that the central bank may dole out more easing steps.
"As the PBOC highlighted the importance of counter-cyclical adjustment to support domestic demand, we maintain our forecast for a 25bp RRR cut in Q3 to facilitate increased government bond issuance and a 10bp policy rate cut in Q4 to lower funding costs for the real economy," Goldman Sachs analysts said in a note.
** China's financial sector sub-index .CSI300FS was lower by 0.15% by the midday recess. The consumer staples sector .CSI000912 dropped 0.89%, while real estate .CSI000952 fell 0.84%.
** Chinese H-shares listed in Hong Kong .HSCE retreated 0.43% to 6,023.45, while the Hang Seng Index .HSI was down 0.36% at 17,111.43.
** The smaller Shenzhen index .SZSC dropped 0.48%, the start-up board ChiNext Composite index .CNT was weaker by 1.01% and Shanghai's tech-focused STAR50 index .STAR50 was down 0.92%.
** On the contrary, MSCI's Asia ex-Japan stock index .MIAPJ0000PUS was firmer by 0.42%, while Japan's Nikkei index .N225 dipped 0.03%.
Reporting by Shanghai Newsroom; Editing by Savio D'Souza
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