China shares down

China's main stock index edged down 0.5 percent on Friday as investors took profits in large-cap shares after the previous day's rally, but the decline was limited by strength in airlines and paper makers on expectations of further yuan appreciation. The benchmark Shanghai Composite Index closed at 3,010.5 points, reversing a 0.7 percent rise on Thursday. The index fell 1.3 percent this week.
"With the (full-year) earnings season finishing, blue chips may face pressure of a pullback," said Wen Lijun, analyst at Nanjing Securities. Agricultural Bank of China, for example, rose 14 percent from mid-March to mid-April, but has now fallen back more than 4 percent since the start of this week after ending Friday down 1.4 percent.
Shares in airlines rose on expectations that the yuan, China's currency, will continue to appreciate more quickly against the dollar after having already risen more than 1 percent so far this year. A stronger yuan would save the airlines cash when they purchase aircraft, denominated in dollars, as well as on fuel costs, analysts said. Flag carrier Air China rose 1.5 percent, while shares in Hainan Airlines were up 3.8 percent.
Paper makers also benefited from expectations of further gains in the yuan, as they need to import significant amounts of material from abroad. Fujian Qingshan Paper Industry, the biggest gainer on the Shanghai market, rallied its 10 percent daily limit, while Nanzhi Co Ltd Fujian also jumped 10 percent. The yuan extended record-high readings on Friday after the People's Bank of China fixed the currency's mid-point at an all-time high, hastening faster appreciation as the government uses the exchange rate to help fight imported inflation.
But financial shares suffered from profit-taking after rising over the last few sessions, with Shanxi Securities dropping 1.8 percent and Hong Yuan Securities falling 2.2 percent. The property sub-index also fell 0.5 percent after the official China Securities Journal reported that the banking regulator had directed banks to conduct another round of stress tests to assess a possible plunge in property prices, envisioning a worst-case 50 percent fall in prices.
Jinan Iron and Laiwu Steel were suspended from trading on Friday after rising by their daily limit for seven consecutive sessions, after announcing a proposal for a merger. The Hong Kong stock market is closed from April 22-25 for a public holiday.