China stocks set for biggest weekly loss in 5 months as Sino-U.S. tensions flare up

SHANGHAI, Dec 11 (Reuters)China’s benchmark share index is poised to post its biggest weekly loss in five months, as a flare-up in Sino-U.S. tensions and worries about policy tightening dented risk appetite.

** Hong Kong stocks tracked Asian markets higher as progress in COVID-19 vaccines boosted investor sentiment.

** The blue-chip CSI300 Index .CSI300 dropped 1.3% to 4,875.26 points, on track to fall more than 3.7% for the week – the biggest weekly decline since July. The Shanghai stock market .SSEC fell 1%.

** In Hong Kong, the Hang Seng index .HSI added 0.3% to 26,485.23 points, while the Hong Kong China Enterprises Index .HSCE gained 0.1% to 10,421.90.

** S&P Dow Jones Indices on Thursday became the second major index provider to remove some Chinese companies from its index products following a Trump administration executive order, in the latest market disruption from persistent Sino-U.S. tensions.

** FTSE Russell made a similar move last week, while rival index publisher MSCI is expected to follow suit.

** Shares of the 10 U.S.-blacklisted companies, including Hangzhou Hikvision Digital Technology Co Ltd 002415.SZ, Semiconductor Manufacturing International Corp (SMIC) 688981.SS0981.HK and China Communications Construction Co 601800.SS all fell moderately on Friday.

** In another sign of rising tensions, the U.S. Federal Communications Commission (FCC) said on Thursday it begun the process of revoking China Telecom’s authorization to operate in the United States.

** Investors are also concerned that Beijing could start tightening monetary policies amid a robust economic recovery and surging commodity prices, though analysts do not see any major policy reversals any time soon.

** “A-share sentiment will likely stay range-bound for the rest of year amid rising signals of potential policy tightening and U.S.-China tension uncertainty,” Morgan Stanley wrote on Friday.

** Chinese stocks fell across the board. Shares of Chinese retailer Co 002024.SZ slumped over 5% on Friday morning amid lingering concerns over its financial health.

(Reporting by Samuel Shen and Andrew Galbraith, Editing by Sherry Jacob-Phillips)

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