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Nikkei Markets

Hong Kong, China stocks extend losses with trade woes in focus

Chinese gas distributors up after NDRC unveils gas connection fee policy

HONG KONG (Nikkei Markets) -- Hong Kong shares edged lower on Thursday as Chinese stocks headed for a third day of losses, with investors still weighing the future of Sino-American trade relations.

The Hang Seng Index slipped 0.2% to 28,795.77 after rising as high as 29,007.98 earlier. Apple supplier AAC Technologies Holdings and pork producer WH Group fell 1.7% and 2.7%, respectively.

Sino Biopharmaceutical climbed 2.8% after the drugmaker said China's National Medical Products Administration approved the registration of Ticagrelor Tablet, an antithrombotic drug or agent that reduces formation of blood clots.

The three major U.S. equity indexes ended at record highs on Wednesday ahead of the July 4 holiday amid mounting expectations for a rate cut by the Federal Reserve. Investors are awaiting nonfarm payroll data for June for further cues on whether the U.S. central bank will ease monetary policy at its review. The Fed's next review starts on July 30. Futures traders are pricing in a 100% probability of a rate cut at the meeting, according to CME's FedWatch Tool. The probability was at about 60% a month ago.

Still, gains were limited with investors uncertain about the outlook of U.S.-China trade relations.

In the mainland, the Shanghai Composite Index fell 0.3%, extending losses after a jump on Monday, following a Sino-American trade war truce agreement over the weekend.

The Hang Seng Index climbed 1.2% on Tuesday after a long weekend, but has pulled back since then.

Jason Chan, a senior portfolio manager at South China Asset Holdings, said the Hang Seng Index has room to rise "a bit more" amid rising expectations for a U.S. rate cut. The gauge could climb to the 29,200 to 29,500 level in the near term, he said.

Chinese gas distributors listed in Hong Kong rose after the National Development and Reform Commission on Wednesday announced a guideline setting a maximum 10% markup limit on residential-use natural gas connection fees, a move that BOCOM International said removes a policy overhang. China Gas Holdings added 5.6%, while ENN Energy Holdings advanced 5.7%.

Future Land Development Holdings slumped 10.6% in Hong Kong, following a 23.9% tumble on Wednesday. The property developer late Wednesday said Chairman Wang Zhenhua is currently being held in criminal custody for personal reasons, which are not related to company operations. It said it was appointing nonexecutive director Wang Xiaosong, son of Wang Zhenhua, as its new chairman.

S-Enjoy Service Group slid 13.1%. Wang Zhenhua is a nonexecutive director at the company.

China Evergrande Group climbed 1.1% after the mainland developer reported a 0.4% increase in contracted sales for June.

-- Amy Lam

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