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Hong Kong stocks decline after soft China economic data

Developers, banks fall after weaker-than-expected retail sales, factory output

HONG KONG (Nikkei Markets) -- Hong Kong shares fell in midday trading on Thursday, with property developers and banks extending a drop after the release of weaker-than-expected Chinese monthly retail-sales and industrial-output data.

The official data for August released on Thursday showed that China's industrial output grew 6% and retail sales increased 10.1% from a year earlier, with both indicators slowing from their pace in July and also missing analysts' expectations compiled by Reuters. Other recent economic data have shown that the nation's exports growth also decelerated last month, while an official gauge of manufacturing activity for August fell short of estimates.

"The moderation in growth momentum in August is consistent with our view of gradual growth slowdown over the rest of the year due to headwinds from the cooling property market, rising financing costs and weakening external demand," economists at Nomura wrote in a report.

The Hang Seng Index lost 0.4% to 27,776.52 by midday. Industrial & Commercial Bank of China (ICBC) slid 1% and China Construction Bank (CCB) fell 0.7%, as they headed toward a three-week low. A Hang Seng gauge of real-estate stocks listed in the city gave up 0.4%, set for a third consecutive day of losses and paring gains so far in 2017 to less than 35%. Cheung Kong Property Holdings slipped 0.9%, and Link Real Estate Investment Trust shed 1%.

"In the near term, there may be a very small pullback. But I think there is good momentum," said Steven Liu, head of research at China Securities International. Equities in "Hong Kong still have a good few months to go, in my view."

The Hang Seng China Enterprises Index of large mainland companies in Hong Kong gave up 0.8%. In mainland China, the Shanghai Composite reversed early gains to slip 0.2% while the yuan weakened less than 0.1% against the dollar to 6.5437.

Regional equities posted modest gains after major U.S. stock indexes crept higher to record levels on Wednesday. The Nikkei Asia300 Index added 0.1%, appearing to shrug off lingering geopolitical tensions.

North Korea on Thursday threatened to use a nuclear weapon to sink Japan, Bloomberg News said, citing a report by the North's state-run media. The isolated country has in recent weeks fired a missile that flew over Japan and tested its most powerful nuclear weapon, leading the United Nations to impose harsher sanctions.

Chinese e-commerce major jumped 4.6% to a one-month high in U.S. trading on Wednesday. The company plans to extend its competitive race with rival Alibaba Group Holding into traditional retailing by rolling out office-based automated food services targeting white-collar workers, Caixin Global reported on Wednesday.

Cathay Pacific Airways fell 0.5% amid the broad market losses in Hong Kong. The airline said in a statement on Wednesday that it will take delivery of five Airbus A350-1000 aircraft in 2021, instead of 2020, and that an existing order for six Airbus A350-1000 aircraft is to be converted into an order for six smaller Airbus A350-900 planes.

China Resources Cement Holdings gained 2.9% after saying late on Wednesday it expects a "significant increase" in profit for the nine months ending Sept. 30.

Apple suppliers listed in Hong Kong were mixed for a second day after the smartphone maker unveiled three new iPhone versions in the U.S. on Tuesday. Apple said its keenly awaited iPhone X will only be available in stores from November, later than many expected.

Sunny Optical Technology Group gained 2.9% and acoustic components maker AAC Technologies Holdings added 1.2%. Camera module maker Cowell E Holdings slid 6.7% and casings manufacturer Tongda Group Holdings lost 1.3%.

Solar-panel maker and farm operator GCL-Poly Energy Holdings jumped 8.9% to 98 Hong Kong cents (13 U.S. cents), while investment holding company HengTen Networks Group added 5.9% to 27 Hong Kong cents. Both were among the most active stocks in Hong Kong on Thursday. Reasons for the gains were not immediately clear.

-- V. Phani Kumar

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