Hong Kong, China shares fall

Shares in Hong Kong and China fell on Thursday, with Shanghai's main index slumping to a four-month low, on signs that the global economic recovery is losing steam and on fears of more policy tightening in China over the coming long weekend.
The Hang Seng ended 1.6 percent lower at 23,253.8 points, giving up almost all of its gains for the week, as investors moved out of financials and energy plays that carry the biggest weightings in the benchmark index. Turnover fell 15 percent compared with the previous session, suggesting there was no rush for the exits despite global market weakness.
China's Shanghai Composite fell 1.4 percent to 2,705.2 points, its lowest level since January, but found support near the 2,700 level from which it had bounced earlier this week. Investors have been rattled this week by data showing a world-wide manufacturing slowdown and fresh weakness in the US labour and housing markets, which could spur further selling of riskier assets such as equities and commodities.
Traders are also on guard for further policy tightening in China, where officials remain intent on curbing stubbornly high inflation despite signs of a modest slowdown in economic growth. The People's Bank of China has picked holidays or weekends to surprise the market with tightening steps, such as hikes in interest rate or banks' reserve requirement ratio (RRR), since it launched its latest monetary tightening cycle last October. Hong Kong and mainland China markets are closed on Monday for holidays.
CNOOC Ltd, which had seen a strong run-up over the past week, fell 2.2 percent, while PetroChina Co Ltd shed 2.1 percent. Newly listed commodities trading powerhouse Glencore International Plc tumbled 4 percent after the European Investment Bank said it had frozen all loans to the company over corporate governance concerns.
Agricultural Bank of China, Hong Kong's top performing large-cap bank stock this year, fell 4.1 percent on 2.6 times its average 30-day traded volume on profit-taking. It is still up 13 percent this year compared with a one percent gain for the Hang Seng and a 3.6 percent decline for the Shanghai Composite. The Shanghai financial sector index lost 3.0 percent, with China's biggest lender, Industrial & Commercial Bank of China (ICBC) down 0.9 percent.
The other three of the so-called "Big Ffour" banks, Bank of China, China Construction Bank and the Agricultural Bank of China declined 1.2 percent, 3.4 and 2.5 percent respectively. Smaller banks, which have a lower deposit base, were seen as more vulnerable to any policy changes. China Merchants Bank Co Ltd dropped 3.8 percent while Industrial Bank Co Ltd retreated 4.1 percent.
A-share turnover on Thursday picked up from Wednesday to hit a seven-day high as investors cut positions as rumours of a interest rate hike swirled, hitting 94.1 billion yuan to finish above its 20-day moving average only for the second time since mid-April. Bucking the overall weak trend, Inner Mongolia BaoTou Steel jumped a maximum 10.1 percent in more than two times its 30-day average volume so far, as investors chased the year's top performers in the construction sector.