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Monday, January 11, 2016, 15:22

Shanghai falls 5% on deflation worries

By Agencies

Shanghai falls 5% on deflation worries
A man scratches his head as he looks at an electronic board displaying stock prices at a brokerage house in Beijing, Jan 11, 2016. (AP Photo / Andy Wong)
SHANGHAI - China stocks closed down on Monday at their lowest since September, following weak inflation data over the weekend and continuing investor anxiety over the economy and the trajectory of the yuan.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 5.0 percent, to 3,192.45, while the Shanghai Composite Index lost 5.3 percent, to 3,016.70 points.

Among the most active stocks in Shanghai were Meiyan Jixiang , down 10.1 percent to 6.53 yuan; Shanxi Coal , up 10.1 percent to 5.12 yuan and Agricultural Bank of China, down 1.9 percent to 3.10 yuan.

In Shenzhen, Hebei Steel, down 0.3 percent to 3.62 yuan; BOE Technology, down 3.2 percent to 2.75 yuan and Myhome, up 2.0 percent to 5.68 yuan were among the most actively traded.

Total turnover of A shares traded in Shanghai was 26.9 billion lots, while Shenzhen volume was 26.0 billion lots.

The smaller Shenzhen index lost 6.21 percent to close at 10,212.46 points. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, dropped 6.34 percent to close at 2,106.36 points.

China stocks fell more than 2 percent in the morning session on Monday, shrugging off a firmer yuan, as data pointed to growing deflationary risks in the world's second-largest economy.

The CSI300 index fell 2.2 percent to 3,288.80 points at the end of the morning session, while the Shanghai Composite Index lost 2.4 percent to 3,109.95.

China CSI300 stock index futures for January fell 2.4 percent, to 3,256, 32.80 points below the current value of the underlying index, suggesting investors see further losses.

"The market is still a bit unstable," said Xiao Shijun, an analyst at Guodu Securities in Beijing.

"Following the big move in the yuan last week, most A-shares are still under a fair amount of pressure."

China's central bank allowed the yuan to weaken by over 1.5 percent against the dollar in the first week of 2016, its biggest currency move since mid August when a depreciation rattled world markets.

The yuan strengthened marginally against the dollar on Monday after the central bank said a firmer midpoint reference rate for the second session in a row.

Some traders believed the stronger official setting may signal the latest jolt of depreciation is over for now, though others said downward pressure on the currency will persist as the economy continues to slow.

December inflation data on the weekend added to investors' concerns.

China's consumer inflation barely edged up in December while companies' factory-gate prices continued to fall, adding to concerns about growing deflation risks.

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