China blue chips ease for the week, resources firms lead gains

SHANGHAI, July 7 (Reuters) – China stocks ended mixed for
the week, with blue chips snapping a two-week winning streak
amid worries over economic growth and rising expectations of
moves toward tighter policy globally.

The blue-chip CSI300 index fell 0.1 percent, to
3,655.93 points, while the Shanghai Composite Index
added 0.2 percent to 3,217.96 points.

For the week, CSI300 eased 0.3 percent, while SSEC gained
0.8 percent.

While there were some concerns that global central banks
might be moving toward tighter policy, Yang Hai, an analyst at
Kaiyuan Securities, said the current tightenings by the Federal
Reserve and possibly the European Central Bank later would have
a limited impact pact on the China market.

The mood has generally been cautious ahead of a raft of
Chinese data in coming weeks, which is expected to show steady
growth though government measures to rein in the housing market
and debt risks are likely to drag on activity over the next few
quarters.

“Slower credit growth and higher funding costs due to
supervisory tightening are expected to have an effect on
fixed-asset investment and activities later in the year,”
economists at UBS said in a research note.

During the week, a wider quota for Hong Kong institutional
investors and a cabinet paper promoting the use of commercial
pension money in capital markets lifted sentiment, as those
moves are expected to bring more long-term funds into the stocks
market.

While some doubt the bull run in blue chips will continue
amid a correction, many analysts see little risk of a major
downturn in firms with solid fundamentals.

For the week, the top performing resources sector
advanced 4.3 percent, posting its fifth straight
week of gains, underpinned by expectations of greatly improved
profitability, helped by an industry recovery and a weaker
dollar.

On the other hand, the defensive consumer sector
slumped 4.4 percent for the week, its worst in 1-1/2 years after
a robust rally this year, as investors rotated into other
sectors with relatively lower valuations.

($1 = 6.8013 Chinese yuan renminbi)
(Reporting by Luoyan Liu and John Ruwitch; Editing by Shri
Navaratnam)

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