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Hong Kong shares erase gains amid caution before holiday

Advances by Tencent and developers outweighed by losses for banks, energy companies

HONG KONG (Nikkei Markets) -- Hong Kong shares succumbed to selling pressure in the afternoon session on Monday, as gains by social-media major Tencent Holdings and real-estate companies were overshadowed by declines for heavyweight banks and oil producers.

The benchmark Hang Seng Index slipped 0.2% to 29,459.63, more than 340 points below the day's peak. It was the index's seventh drop in eight trading days. Industrial & Commercial Bank of China (ICBC), the nation's biggest lender, sank 1.1% and was the biggest drag by points. U.K.-based lender HSBC Holdings shed 0.5% and conglomerate Cheung Kong Hutchison Holdings lost 1.6%, while energy producers CNOOC and PetroChina gave up 2.2% and 1.7%, respectively.

Tencent added 0.5%, China Resources Land climbed 1.7% and Sino Land advanced 1.5% among the gainers.

The day was marked by caution as U.S. Treasury yields stayed near elevated levels and investors looked ahead to the upcoming Chinese New Year holiday. Southbound trading, which allows mainland investors to invest in Hong Kong's stock market, will not take place from Tuesday through Feb. 21. Flows via the trading links with Shanghai and Shenzhen have been a key source of buying support for Hong Kong equities over the past several months.

Mainland Chinese investors made net purchases of around 5.2 billion yuan ($826 million) worth of Hong Kong stocks on Monday. Turnover on the local stock exchange's main board for the day topped 134 billion Hong Kong dollars ($17.14 billion).

Stanley Chik, head of research at Bright Smart Securities in Hong Kong, said investors were on edge as the 10-year U.S. Treasury yields were near 2.9%, a four-year high. "There is also a little impact because of the close of southbound trading from tomorrow," although the losses were mainly because of uncertainty over U.S. markets.

The Hang Seng China Enterprises Index, which tumbled 12.1% last week, ended little changed at 11,900.31. In mainland trading, the Shanghai Composite Index advanced 0.8%. The yuan traded onshore weakened 0.5% to 6.3263 against the U.S. dollar.

New China Life Insurance increased 0.4% in Hong Kong after saying its gross premium income in January totaled 18.64 billion yuan, 10% higher than a year earlier.

Developer Ronshine China Holdings slid 2.2% after a unit agreed to acquire land parcels in China for about 801.9 million yuan.

Poly Property Group gained 1.6% as it reported contracted sales of 4.9 billion yuan for January, a 14% increase from a year earlier.

Carmaker BAIC Motor advanced 1.7% after its board agreed on Friday to transfer certain assets of its Beijing branch to its subsidiary Beijing Benz Automotive, in which Daimler holds a 49% interest.

Cinda International Holdings added 1.2% after saying it expects net profit for 2017 to increase by more than 40% from a year earlier.

-- Carrie Chen and Amy Lam

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