SHANGHAI: China stocks fell on Friday, led by tech and automobile shares, after the central bank kept its policy rates unchanged, even as the economy grapples with its worst COVID outbreak in two years.

The blue-chip CSI300 index fell 0.1% to 4,188.75, while the Shanghai Composite Index lost 0.5% to 3,211.24. For the week, both indexes dropped 1%.

The Hong Kong market was closed for a holiday.

China’s central bank kept borrowing costs of its medium-term policy loan unchanged for the third straight month, despite Beijing calling for more monetary stimulus to cushion an economic slowdown.

Investors are increasingly worried about the economic cost of China’s zero-COVID policy, which has put the financial hub of Shanghai, and roughly a dozen other cities under full or partial lockdowns, disrupting economic activity.

“The People’s Bank of China (PBOC) forwent the opportunity to lower its policy rates today. That’s somewhat surprising given the sharp economic downturn and recent calls from China’s leadership for monetary support,” wrote Julian Evans-Pritchard, senior China economist at Capital Economics.

“It underscores the reluctance of the central bank to aggressively ease policy. But we think it will have little choice but to do more before long.” Shanghai’s tech-focused STAR market fell 0.2%, while Shenzhen’s start-up board ChiNext dropped 1%.

Automobile shares dropped 0.8%.

China’s COVID curbs are clogging highways and ports, stranding workers and shutting countless factories - disruptions that are rippling through global supply chains.