China’s Stocks Drop as U.S. Jobs, Chinese Inflation Hurt Outlook

China’s stocks fell for the third time in four days on concern slumping U.S. jobs growth, Europe’s worsening debt crisis and faster Chinese inflation may hurt the global economic recovery.

China’s Stocks Drop as U.S. Jobs, Chinese Inflation Hurt Outlook

Industrial & Commercial Bank of China Ltd. and Poly Real Estate Group Co. paced declines among financial companies on speculation the government will intensify monetary tightening measures after consumer prices surged to a three-year high in June. SAIC Motor Corp. led an advance for automakers after China’s passenger-car sales climbed last month.

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, slipped 8.7 points, or 0.3 percent, to 2,789.08 at 9:39 a.m. local time. The CSI 300 Index declined 0.3 percent to 3,098.92.

“The June inflation number had already been widely expected by the market and its impact will be minor,” Ling Peng, chief strategist at Shenyin & Wanguo Securities Co., said in an interview from Shanghai. “Inflation may have already peaked.”

The central bank raised interest rates last week for a fifth time since the start of last year to curb gains in consumer prices. The Shanghai gauge has erased much of this year’s loss of as much as 6.7 percent on speculation inflation is peaking and fiscal policies such as spending in affordable housing will support the economy. Premier Wen Jiabao said on June 24 efforts to stem inflation have worked.

Inflation Data

Consumer prices rose 6.4 percent in June, mainly driven by a 14 percent gain in food costs, the statistics bureau said on its website over the week-end. The pace exceeded the 6.2 percent median estimate in a Bloomberg News survey of 19 economists. Producer prices gained 7.1 percent, the bureau said. That compared with the median estimate of 6.9 percent.

It is “difficult” to loosen monetary policy now as asset price bubbles including real estate and investment products are still “relatively serious,” the Financial News newspaper reported today on its front page, without citing anyone. The newspaper is published by the People’s Bank of China.

China’s economy probably grew 9.3 percent in the second quarter, the least in almost two years, according to the median estimate in a Bloomberg survey. It expanded 9.7 percent in the first quarter. The figure is due July 13.

Exports climbed 17.9 percent in June, the least since December after excluding seasonal distortions from the Chinese New Year holiday, the customs bureau said on its website yesterday. Imports jumped 19.3 percent, it said, the weakest expansion since gains resumed in November 2009 after a year-long decline. The trade surplus widened to $22.3 billion in June, the highest level in seven months.

Global Concerns

The Standard & Poor’s 500 Index dropped 0.7 percent on July 8 as the weakest American job growth in nine months hurt companies most-closely tied to the economy. U.S. payrolls increased by 18,000 in June, less than the most pessimistic forecast in a Bloomberg News survey of economists, which called for growth of 105,000 on average. The jobless rate rose to a 2011 high of 9.2 percent.

The euro fell to a two-week low against the dollar and yen after a meeting of the chiefs of the European Union and European Commission was enlarged amid concern Italy may be engulfed in the region’s sovereign debt crisis.

Bloomberg

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