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China’s Stocks Decline to Four-Month Low; Sinopec, Yili Retreat

April 26 (Bloomberg) -- China’s stocks fell, dragging the benchmark index to the lowest level in four months, before next week’s holidays and as China Petroleum & Chemical Corp. reported earnings that trailed estimates.

China Petroleum, Asia’s biggest refiner that’s also known as Sinopec, lost 0.7 percent. China Southern Airlines Co. slid 2 percent after profit plunged in the first quarter. Inner Mongolia Yili Industrial Group Co. tumbled the most in nine months before reporting earnings later today. Huaxia Bank Co. rallied 2.8 percent after net income climbed 26 percent. Trading volumes on the Shanghai Composite Index were 16 percent lower than the 30-day average.

“Earnings have been mixed,” said Wang Weijun, a Zheshang Securities Co. strategist in Shanghai. “The market has been volatile as investors are divided over whether the government will take steps to curb lending and cool the property market.”

The Shanghai Composite lost 1 percent to close at 2,177.91, the lowest level since Dec. 24, as a gauge of 100-day volatility climbed to the highest in a year. China’s financial markets will be shut from April 29 through May 1. The gauge retreated 2.6 percent in April and dropped 3 percent this week.

The CSI 300 Index slid 0.8 percent to 2,447.31. The Hang Seng China Enterprises Index gained 0.8 percent in Hong Kong. The Bloomberg China-US 55 Index added 1.7 percent yesterday.

Growth Concern

The Shanghai Composite has slumped 11 percent from a Feb. 6 high on concern slowing growth will hurt earnings. The economy expanded 7.7 percent in the first quarter, missing estimates, as industrial production and fixed-asset investments in March fell short of forecasts. The index trades at 11.9 times reported profit, within 2 percent of the lowest level since Dec. 21, according to data compiled by Bloomberg.

China’s top leaders said the country must guard against financial risks and boost consumption amid signs that the recovery in the world’s second-biggest economy is faltering.

“China needs to cement its domestic economic growth momentum and guard against potential risks in financial sectors,” the Politburo Central Committee said in a statement late yesterday published by the official Xinhua News Agency. Macro-economic policies should be stabilized and micro controls in some sectors should be loosened, it said.

The statistics bureau is due to release industrial companies’ profits for March tomorrow. Net income increased 17.2 percent from a year earlier in the January-February period, according to the bureau.

Company Earnings

Sinopec fell 0.7 percent to 6.73 yuan. The refiner said net income rose 25 percent to 16.7 billion yuan ($2.7 billion) in the first quarter, trailing the 18.9 billion-yuan average of analyst estimates.

China Southern, the nation’s biggest carrier by fleet size, slid 2 percent to 3.45 yuan after saying first-quarter profit slumped 82 percent from a year earlier.

Inner Mongolia Yili, China’s biggest dairy producer by sales, slumped 4 percent to 29.24 yuan, its biggest loss since July 16. Net income probably increased 38 percent from a year earlier to 1.8 billion yuan, according to the average estimates of nine analysts surveyed Bloomberg.

Huaxia Bank, partly owned by Deutsche Bank AG, advanced 2.8 percent to 10.47 yuan, the biggest contributor to gains on the Shanghai Composite. The lender said first-quarter profit rose 26 percent to 2.95 billion yuan.

Bank of Nanjing Co., a Chinese lender part-owned by BNP Paribas SA, gained 1 percent to 9.06 yuan after net income increased 15 percent in the first three months of the year.

The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., climbed 1.6 percent to $37.05 yesterday, a one-month high.

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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