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Hong Kong shares stutter ahead of Fed minutes release

HONG KONG (NewsRise) -- Hong Kong stocks ended their longest winning streak in almost three months as energy producers retreated after an overnight pullback in oil prices while traders awaited minutes of the U.S. Federal Reserve's last meeting.

The Hang Seng Index slipped almost 0.1% to 22,134.47 on Wednesday, diverging from broad advances in mainland China and the rest of Asia. PetroChina lost 1.2% to HK$5.73. Sands China fell for a second day after data showed that Macau gaming revenue increased at a slower pace in December than some analysts had expected. Heavyweight stock HSBC Holdings climbed 0.7% to HK$63.45 amid expectations it would benefit from rising local borrowing costs.

The U.S. central bank will later on Wednesday disclose details of its December meeting, where monetary policy committee members increased their forecasts for interest-rate increases this year to three from two previously. The minutes may also shed light on discussions about how President-elect Donald Trump's policies could influence the outlook for inflation and economic growth.

Hong Kong equities are heavily influenced by the Fed's decisions as borrowing costs in the city move in lock-step with U.S. rates. The city's currency is pegged to the greenback.

"If the Fed actually raises rates by three times this year, it will have negative implications for Hong Kong markets," said Sam Chi-yung, senior strategist at South China Financial Group. "In such case, you can expect developers to come under pressure, while HSBC, in line with other global banks, will outperform."

The Nikkei Asia300 Index added 0.2% to 1,042.48.

The Shanghai Composite rose 0.8% to a three-week high, helped by a decline in short-term money-market rates. The onshore yuan strengthened 0.2% to 6.9450 against the dollar, while the unit traded in Hong Kong jumped 0.5% to 6.9248. The offshore currency's gains came amid a jump in yuan funding costs in Hong Kong and reports that China is considering contingency plans to stem capital outflows.

China Petroleum and Chemical (Sinopec) slipped 0.9% to HK$5.52. The refiner has mandated six banks for advice on a restructuring of its retail marketing unit ahead of a planned initial public offering in Hong Kong, according to a report by financial publication IFR.

Lenovo Group added 2.3% to HK$4.90. The personal-computer maker on Tuesday announced the launch of a smart-home technology in collaboration with Amazon.

China Railway Group rose 2.7% to HK$6.51. Nomura upgraded the stock to "buy" from neutral, citing attractive valuations after a recent correction.

China Shenhua Energy climbed 3.3% to HK$15.12 after saying it will purchase as much as 33 billion yuan ($4.8 billion) in wealth-management products from China Construction Bank (CCB) and Industrial and Commercial Bank of China (ICBC).

SAIC Motor gained 1.7% in Shanghai. It reported growth of more than 10% in December sales from a year-earlier, according to a Reuters report.

-- V. Phani Kumar and Nimesh Vora

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