China shares fall as deflationary pressures persist

Chinese shares dipped for a second straight day on Wednesday as deflationary pressures persisted, even as property stocks surged led by Vanke, which began a debt-extension vote.

** The benchmark Shanghai Composite Index .SSECfell 0.2% to close at 3,900.50, marking its second consecutive day of fall. The blue-chip CSI 300 Index .CSI300 lost 0.1%.

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

** "Concerns remain on broadness and sustainability of price recovery," Citi analysts said in a note.

** "Ongoing policy efforts especially on demand are warranted for sustainable reflation, and we await the upcoming Central Economic Work Conference (CEWC) for more clues."

** The banking sector .CSI399986 lost 1.6%, its biggest single-day loss in more than a month, to weigh on the benchmark.

** Tech shares mostly recovered from a sell-off triggered by U.S. President Donald Trump's comment that Nvidia would be allowed to ship its advanced AI chip H200 to China, while Beijing is said to restrict access despite the export approval, the Financial Times reported.

** The CSI AI Index .CSI930713 closed 0.3% higher and the CSI Semiconductor Index .CSI931865 added 0.2%, recovering from earlier losses.

** Against broader weakness, Vanke led the surge in China property shares as it began a debt-extension vote and amid unverified market rumours of a 400 billion-yuan government mortgage subsidy package.

** China Vanke 000002.SZ rose by the daily limit of 10%, and the CSI 300 Real Estate Index .CSI000952 surged as much as 7%, rebounding from an all-time low touched earlier in the day.

** Hong Kong's benchmark Hang Seng Index .HSI added 0.4% to 25,540.78 and the tech index .HSTECH added 0.5%.

-Jiaxing Li/Reuters