China’s Stocks Decline as Commodity Slump Overshadows Bank Gains

China’s stocks fell as commodity producers led declines on benchmark indexes amid lower material prices, overshadowing gains for banks after new loans and money supply data exceeded analysts’ forecasts.

Jiangxi Copper Co., the nation’s biggest producer of the metal, slid the most in a week after metal prices retreated. Aluminum Corp of China Ltd. slumped the most in two weeks after rallying 5.6 percent yesterday. Industrial Bank Co. paced gains for lenders, rising 2.3 percent.

The Shanghai Composite Index dropped 0.3 percent to 2,219.55 at the close, after changing directions at least 11 times. The measure rose as much as 0.7 percent earlier after a government report showed new local-currency lending in March was 1.06 trillion yuan ($171 billion), compared with the 900 billion yuan in a Bloomberg News survey of 34 economists. Other reports this week showed March exports fell more than forecast, inflation eased and producer prices slumped for a 13th month.

“Cyclical stocks such as energy and materials are always the first to be hit when people have concerns about the economy,” Zhang Lei, an analyst with Minsheng Securities Co., said by phone from Beijing. “Stocks rose this morning due to the loans data but it’s not strong enough to maintain gains. The weak data from the previous two days such as PPI and exports mean economic fundamentals are still weak and any gains will be short-lived.”

The CSI 300 Index declined 0.3 percent to 2,477.88. The Hang Seng China Enterprises Index slipped 0.1 percent. The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. rose 0.9 percent yesterday, led by Suntech Power Holdings Co. and Baidu Inc.

Bank Loans

The Shanghai index has slid 8.8 percent from a Feb. 6 high amid concern steps to cool property prices will drag on economic growth. The gauge’s trading volume was 30 percent below the 30-day average today, according to data compiled by Bloomberg.

Valuations on the Shanghai gauge dropped to 9.1 times projected 12-month earnings, near the lowest level since Dec. 13 and less than the seven-year average of 15.8, data compiled by Bloomberg show.

A gauge of material producers in the CSI 300 fell 0.9 percent, the most among the 10 industry groups. Jiangxi Copper slid 1.6 percent to 22.09 yuan. Copper for August delivery on the Shanghai Futures Exchange fell 0.5 percent to close at 54,890 yuan ($8,858) a ton. Aluminum Corp. retreated 2.8 percent to 4.22 yuan after surging 5.6 percent yesterday.

Industrial Bank led gains for lenders, advancing 2.3 percent to 17.65 yuan. Huaxia Bank Co. climbed 0.3 percent to 10.17 yuan.

Bank Loans

March’s local-currency loans rose from 620 billion yuan in February. M2 money supply jumped 15.7 percent, more than the median forecast of 14.6 percent, the People’s Bank of China said.

The “strong” bank lending and M2 money supply data signal monetary policy was loose in March, increasing the likelihood of more policy tightening ahead, according to Nomura Holdings Inc.

The nation’s economic recovery has been “shallow” and there are signs that growth momentum may have slowed in March despite loose policy stance, as suggested by weak electricity consumption and freight traffic growth, Zhang Zhiwei and Wendy Chen, economists at Nomura, wrote in a report dated today.

The National Bureau of Statistics is scheduled to publish first-quarter gross domestic producer and fixed-asset investment as well as March readings of industrial output and retail sales on April 15.

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