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Nikkei Markets

Hong Kong shares pull back after Trump stokes trade-war fears

Chow Tai Fook slides on weak June quarter same-store sales; CNOOC falls 2.1%

HONG KONG (Nikkei Markets) -- Hong Kong shares headed lower on Wednesday after comments from U.S. President Donald Trump on Sino-American trade relations dampened expectations of an early resolution to the spat.

The Hang Seng Index slipped 0.3% to 28,531.78 by noon after rising 1.8% over the past five trading days. Offshore oil producer CNOOC declined 2.1%, contributing most to the gauge's losses by points, after Brent crude prices slid 3.2% overnight. Heavyweight mainland lenders China Construction Bank and Industrial & Commercial Bank of China declined 0.6% and 0.9%, respectively.

All three major U.S. equity indexes slipped on Tuesday, coming off record highs, after Trump at a cabinet meeting said the U.S. has a "long way to go as far as tariffs where China is concerned," adding that there are "another $325 billion" worth of Chinese goods that could be tariffed.

The comments came weeks after Trump and Chinese President Xi Jinping agreed at Group of 20 summit in Japan to resume trade talks. The U.S. said it would hold off from imposing more punitive tariffs on Chinese goods.

Trump's comments have "scared" investors, said Jackson Wong, asset management director at Amber Hill Capital. "It is worrying that he is saying the opposite of what he said after the G-20 summit. Still, we do not know if this is a negotiation tactic or for real."

Meanwhile, Federal Reserve Chairman Jerome Powell at a Bank of France dinner in Paris on Tuesday reiterated that the central bank is monitoring downside risks to growth and will act as appropriate. The Fed is widely expected to cut interest rates at its policy review on July 30 and 31.

In the mainland, the Shanghai Composite Index slipped 0.1%. The yuan traded onshore declined 0.1% against the dollar to 6.8823.

Chow Tai Fook Jewellery Group lost 3.2% in Hong Kong after the jewelry retailer said that June quarter same-store sales rose 24% in mainland China, but fell 11% in Hong Kong and Macao. Goldman Sachs said the decline in Hong Kong and China was worse than expected, adding that the "weakness indicates a more serious sales deterioration in June versus April to May."

China Shanshui Cement Group rose 3.7% after saying it expects to report a "substantial" increase in profit for the six months ending in June from a year ago.

Shenzhen Investment rose 1.8% following a more than tripling in the Chinese property developer's contracted sales in June.

China Pacific Insurance (Group) edged 0.9% higher after reporting a 6.5% year-over-year increase in gross premium income from its life insurance unit for the January to June period.

DTXS Silk Road Investment Holdings slumped 8% to 5.97 Hong Kong dollars after saying it has agreed to issue 111.2 million new shares at HK$5.3873 apiece to a unit of Hong Kong-listed New World Development. DTXS expects to raise about HK$599 million ($76.6 million) from the issue. New World Development shares slipped 0.6%.

Power-line communication products maker Risecomm Group Holdings slid 6.6% after saying it expects a net loss for the six months ending in June to widen "significantly" from a year ago.

Bonjour Holdings fell 2.3%, extending a 3.3% drop on Tuesday, after the Hong Kong-based cosmetics retailer said it expects to swing to a loss for the six months ending June 30.

-- Amy Lam

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