China and Hong Kong Stocks fall on mixed inflation data, tech drags

China and Hong Kong shares dipped on Wednesday as deflationary strains persist, while tech and banking stocks paced losses as investors awaited a key policy meeting.

** As of midday trading break, the benchmark Shanghai Composite Index .SSEC declined 0.7% to 3,881.51, and the blue-chip CSI 300 Index .CSI300 lost 0.8%.

** China's consumer price index (CPI) rose 0.7% from a year earlier in November, a 21-month high, while the producer price index (PPI) fell 2.2% year-on-year as factory-gate deflation deepened.

** Tech shares declined after U.S. President Donald Trump said Nvidia NVDA.O will be allowed to ship its second-most advanced AI chip H200 to China.

** The CSI AI Index .CSI930713 declined 1.5%, the CSI Semiconductor Index .CSI931865 lost 1.1% and the info tech sector .CSIINT was down 1.7%.

** The banking sector .CSI399986 shed 1.6%, the biggest intraday decline in over a month if sustained.

** The photovoltaic industry index .CSI931151 was down 2.5%, also weighting on the markets.

** "The second wave of stock market rally is set to face tough challenges with more volatilities and sector rotations," analysts at TF Research said.

** The upcoming Central Economic Work Conference's guidance for next year is likely to focus on "stabilizations" and reiterate the more proactive fiscal policy and moderately accommodative monetary policy mentioned before, they added.

** In Hong Kong, the benchmark Hang Seng Index .HSI lost 0.4% to 25,325.05, and the tech index .HSTECH lost 0.7%.

** Around the region, Asian shares were soft as crunch time neared for a divided Federal Reserve policy board. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.1%.

-Jiaxing Li/Reuters