Hong Kong shares soften

Hong Kong blue chips dropped 0.8 percent and China plays fell 0.4 percent on Friday, as a tumble in mainland bourses dragged down China Life and other Chinese financial plays. But Yanzhou Coal Mining Co Ltd rallied to an all-time high after agreeing to sell thermal coal at prices that were 15 percent higher than last year.
The market retreated from a firm opening as buying interest waned on the approach of a three-day weekend. "The market is already in a holiday mood," said Patrick Yiu, associate director at CASH Asset Management.
The benchmark Hang Seng Index closed down 165.49 points at 21,772.73, for a monthly rise of 5.5 percent, its biggest since November 2004. It gained 9 percent over the first six months of the year. The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, finished down 48.88 points at 12,001.12.
It posted gains of 11.8 percent for the month, the highest since December, and 16 percent for the year's first-half. Mainboard turnover of HK$68.9 billion (US $8.8 billion) was down sharply from Thursday's HK$80.5 billion, the eighth-largest ever.
"The selling pressure isn't too great because you can see the turnover is shrinking," said Linus Yip, strategist at First Shanghai Securities. "In the short- to medium-term, the market will still be in an uptrend. It has a chance to test higher." Yanzhou Coal surged 8 percent to HK$11.94 after agreeing to sell 200,000 tonnes of thermal coal to Japanese utilities at $75 per tonne free on board, a 15 percent rise on 2006 prices but a fraction of the volume sold last year, a source familiar with the deal said on Thursday.
Peer China Shenhua jumped 3 percent to HK$27.3 in heavy trade. Hong Kong Exchanges and Clearing advanced 1.5 percent to HK$110.50, having earlier tapped new highs, as the totally 3 percent to HK$28.10. Bank of China fell 1 percent to HK$3.88.
Jiangxi Copper Co Ltd sagged 2.4 percent to HK$13.14 in heavy trade after Goldman Sachs downgraded China's top producer of the red metal to neutral from buy on valuation and processing business risk. Sharply declining spot processing fees would likely put pressure on Jiangxi copper's smelting operations, the investment bank said on Friday.
New issue Chinese restaurant group Tao Heung Holdings rose as much as 4 percent before easing slightly to end 2.5 percent higher than its $3.18 issue price after raising US $51 million in a Hong Kong initial public offering. Its shares settled at HK$3.26.