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Hong Kong Stocks Decline First Time in 3 Days on Coal

Hong Kong stocks fell after capping their biggest two-day gain in almost three months. Coal producers declined as China’s government said it will control consumption of the fuel to curb pollution.

China Shenhua Energy Co., the listed unit of the nation’s No. 1 coal producer, slid 2.8 percent. Prada SpA declined 4.9 percent after the Italian handbag maker reported weakening quarterly sales growth and softening demand in Europe and Asia. GCL-Poly Energy Holdings Ltd., the world’s biggest maker of polysilicon for solar panels, requested a trading halt amid speculation it may inject assets into another company.

The Hang Seng Index dropped 0.5 percent to 22,165.53 at the close in Hong Kong, the steepest slide since Feb. 5, after rising 3.3 percent the past two trading days. More than twice as many stocks declined as gained on the 50-member gauge. The Hang Seng China Enterprises Index, also known as the H-share index, lost 1.2 percent to 9,872.71.

“We had a sharp rebound in the Hong Kong market recently so some consolidation is reasonable,” said Linus Yip, a strategist at First Shanghai Securities Ltd. “The energy sector, especially coal, isn’t a good topic right now” amid a focus on environmental concerns, he said.

A measure of energy companies had the biggest drop on the Hang Seng Composite Index. China Shenhua fell 2.8 percent to HK$20.75. China Coal Energy Co. slid 3.9 percent to HK$3.92, the biggest drop on the Hang Seng Index, while Yanzhou Coal Mining Co. sank 3.1 percent to HK$5.96.

China will set up a 10 billion yuan ($1.65 billion) fund to reduce air pollution in the country’s largest cities through efforts to cut fossil-fuel use, according to a release from a State Council meeting. Sixteen Chinese listed coal companies are reporting losses or profit declines for 2013, the Economic Information Daily reported.

Low Valuations

The Hang Seng Index dropped to 9.8 times reported earnings at the end of last week, the widest discount versus the MSCI World Index since May 2003, data compiled by Bloomberg show. The gauge has fallen 4.9 percent this year, the second-worst performer among 24 developed markets tracked by Bloomberg.

Hong Kong’s benchmark index entered a so-called correction last week, sliding at least 10 percent from its recent peak in December, as China’s official manufacturing index for January signaled a slowdown in the world’s second-largest economy. The H-share gauge is down 8.7 percent this year.

China is due to release January data on new yuan loans and money supply this week, while reports on producer and consumer prices are scheduled tomorrow.

U.S. Shares

Futures on the Standard & Poor’s 500 Index lost 0.4 percent today. The gauge slid less than 0.1 percent yesterday, after the biggest four-day jump in a year, as declines in companies from Procter & Gamble Co. to Inc. overshadowed optimism about economic growth.

U.S. retail sales stagnated in January after a 0.2 percent gain the prior month, according to the median estimate of economists in a separate survey by Bloomberg News before the U.S. Commerce Department reports the data later today.

Prada slumped 4.9 percent to HK$60.55. Sales climbed 9 percent to 3.59 billion euros ($4.9 billion) in the 12 months through January, missing the 3.64 billion-euro average estimate of 29 analysts compiled by Bloomberg.

The compiler of Hong Kong’s benchmark stock gauge yesterday announced its quarterly review. Milk-products maker China Mengniu Dairy Co. will be added to the Hang Seng Index effective March 10, while China Coal will be removed. BYD Co. will replace Zoomlion Heavy Industry Science & Technology Co. in the H-share gauge.

Mengniu, BYD

China Mengniu Dairy climbed 3.8 percent to HK$39.40, while BYD, a maker of electric vehicles, advanced 6 percent to HK$42.15. Zoomlion Heavy dropped 4.6 percent to HK$5.78.

GCL-Poly shares were halted from trading pending the release of an announcement. The market is speculating the company may inject its non-key assets such as its solar-power plant business into Same Time Holdings Ltd., Karl Liu, a Hong Kong-based analyst from Bank of China International Ltd. said by phone. Same Time was also suspended from trading.

Among stocks that rose, Want Want China Holdings Ltd. jumped 6.5 percent to lead gains on the Hang Seng Index after Bank of America Corp. raised its rating on the maker of snacks and beverages.

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