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Nikkei Markets

Nikkei Asia300 drops as Fed signals more rate hikes for 2018

Ping An rises in Hong Kong after upbeat premiums data while ZTE extends losses

HONG KONG (Nikkei Markets) -- Asian stocks outside of Japan fell Thursday after the U.S. central bank raised interest rates and indicated the possibility of two more increases this year.

The Nikkei Asia300 Index shed 1.1% to 1,393.49. Heavyweights led losses on the gauge, with Samsung Electronics and Hyundai Motor sliding 2.4% and 3.9% in Seoul, while Tencent Holdings fell 0.8% in Hong Kong.

U.S. equity benchmarks ended lower overnight following the Fed's move to raise its key interest rate by 25 basis points for the second time this year. The central bank also signaled the likelihood of a total of four increases during 2018, up from a March forecast for three.

China's central bank left borrowing costs for interbank loans unchanged on Thursday following the U.S. Fed's rate increase. Data released Thursday showed China's retail sales rose a lower-than-expected 8.5% in May. Analysts polled by Reuters were expecting an increase of 9.6% last month. Industrial production for the month expanded 6.8%, also missing expectations.

The Hong Kong Monetary Authority on Thursday raised its benchmark rate by 25 basis points. Hong Kong's monetary policy is tied to the Fed as its currency is pegged to the dollar. Rate sensitive stocks such as developers fell, with Hang Lung Properties sliding 1.7%.

Ping An Insurance Group rose 0.6% in Hong Kong after saying accumulated gross premium income for its life insurance business in the January-to-May period was up 21.3% on year. China Life Insurance, which reported a 2.9% increase in accumulated premium income for the first five months of the year, shed 0.5%.

Chinese telecommunications equipment maker ZTE lost 1.1% in Hong Kong after a 41.6% drop on Wednesday, while its Shenzhen-listed shares fell by the maximum permissible 10% for a second day in China. The stock resumed trading in both cities Wednesday following a near two-month-long halt after saying it will pay $1.4 billion in civil penalties and make changes to its board and management to lift a U.S. ban on American companies supplying it with components.

ZTE late Wednesday said it plans to hold an annual general meeting on June 29 in Shenzhen, where it proposes to elect five non-independent directors and three independent non-executive directors.

Swire Pacific edged 0.2% lower. The conglomerate's unit Swire Properties is in talks to sell its stakes in two Hong Kong towers to Hengli Investments Holding Group for more than HK$14 billion ($1.8 billion), Bloomberg reported, citing people familiar with the matter.

Drugmaker Lupin rose 3.4% in Mumbai after saying it received U.S. Food and Drug Administration approval for the generic version of Bayer Healthcare's Beyaz oral contraceptive tablets. Cipla advanced 1.1% after the U.S. heath regulator approved a generic version of an injection used to treat episodes of heart blockages.

--V. Phani Kumar

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