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Nikkei Markets

Hong Kong shares extend losses weighed down by trade uncertainty

CNOOC slides after Daiwa downgrade and oil-price decline

HONG KONG (Nikkei Markets) -- Hong Kong shares headed lower on Thursday following a retreat on Wall Street overnight, as uncertainty over the outcome of the U.S.-China trade war kept investor sentiment subdued.

The Hang Seng Index lost 0.5% to 28,453.57 by noon after slipping 0.1% on Wednesday. Heavyweights Tencent Holdings and HSBC Holdings slipped 1.3% and 0.3%, respectively.

Offshore oil producer CNOOC fell 2.6% to HK$12.84, taking losses for the week to 4.6%. Daiwa Capital Markets downgraded the stock to "hold" from "outperform" and cut its price target to HK$13.80 from HK$15.70, citing oil-price weakness. Brent crude prices are down more than 4% this week. PetroChina slipped 0.7%.

Turnover on the Hong Kong Stock Exchange's main board was weaker than usual at 33.58 billion Hong Kong dollars ($4.3 billion).

The S&P 500 Index declined 0.7% overnight, while the Nasdaq Composite shed 0.5% and the Dow Jones Industrial Average slipped 0.4% amid mixed quarterly results from U.S. companies contending with the fallout from the trade war. Meanwhile, concerns over an escalation of trade tensions between the U.S. and China weighed on sentiment after President Donald Trump this week indicated that he could impose additional trade tariffs on Chinese goods.

The safe-haven Japanese yen rose 0.2% against the U.S. dollar.

Progress toward a trade deal has stalled as Washington determines how to address Beijing's demands to ease restrictions on Huawei Technologies, The Wall Street Journal Reported, citing people familiar with the talks. Trade negotiators from both nations spoke over the phone last week and are expected to talk again this week.

Vicks Poon, head of investment advisory at Fubon Bank (Hong Kong), said the market was using the excuse of a possible stalemate in trade talks to retreat on Thursday.

"There is a lack of new developments," he said, adding that if there are just phone calls between the two nations and no other breakthroughs, the market "will be more pessimistic."

In the mainland, the Shanghai Composite Index declined 0.7%, while the yuan traded onshore edged 0.1% lower against the dollar to 6.8769.

Midland IC&I fell 1.1% in Hong Kong after the industrial and commercial property agency said it expects a consolidated profit of HK$20 million for the five months ending May 31, and a "slight" profit for June, compared with a profit of HK$50 million for the six months ending June 30, 2018.

CGN New Energy Holdings lost 1% following a 21% decline in the Chinese power producer's June power generation.

Sanai Health Industry Group jumped 31.6% after saying it expects to report a profit for the six months ending June 30, compared with a loss in the year-ago period.

Entertainment services company Maoyan Entertainment, which also said it expects to swing to a profit for the six months ending in June, added 2.1%.

Tissue paper products producer Vinda International Holdings added 6.4% after reporting a 5.4% increase in profit for the first half and a 7.6% higher revenue.

Ajisen (China) Holdings rose 9.6% after the fast-food restaurant chain reported a 4.8% increase in second-quarter same-store sales for Hong Kong.

-- Amy Lam

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