Chinese stocks flat as tech drags, investors seek defensive plays

China shares ended flat on Thursday as investors rotated into defensive sectors amid concerns over artificial intelligence spending and regional tensions, while tech and property stocks weighed on sentiment.

** The benchmark Shanghai Composite Index .SSEC added 0.2% to close at 3,876.37, and the blue-chip CSI300 Index .CSI300 dropped 0.6%. Both were headed towards a week of losses.

** Hong Kong's benchmark Hang Seng Index .HSI added 0.1%. The Hang Seng Tech Index .HSTECH lost 0.7%.

** Leading gains onshore, China's CSI Defense Index .CSI399959 rose 1.9% to a two-month high, after the U.S. approved an $11.1 billion arms package for Taiwan, the largest ever.

** The CSI Banks Index .CSI399986 added 2% and the energy sector index .CSIEN jumped 1.7% as investors piled into defensive plays.

** The financials sector .CSI300FS climbed 0.8%, with broker CICC 601995.SS soaring as much as 10% to the daily limit after unveiling plans on Wednesday to buy two smaller rivals in a share-swap deal worth about $16 billion.

** Among laggards, the CSI AI Index .CSI930713 and the semiconductor sector .CSI931865 both lost 1.8%, after jitters over AI funding dragged tech stocks on Wall Street overnight.

** The CSI 300 Real Estate Index .CSI000952 lost 1.8% as developer Vanke's debt crisis continued.

** "We continue to expect the market to remain volatile at elevated levels, and a clearer signal of sustained upside is still needed," analysts at Huaan Securities said in a note.

** "January following a strong year tends to see heightened swings, suggesting short-term risks of a pullback remain," they added.

** Asian shares fell as the tech sector took a beating on renewed angst over AI, while investors braced for a wave of central bank meetings that are set to underscore policy divergence worldwide.

-Jiaxing Li/Reuters