HONG KONG (MarketWatch) -- Chinese stocks pushed deeper into negative territory Tuesday afternoon, with investors' worries piqued by July trade data that raised questions over the vitality of domestic consumption and prospects of a faster appreciation of the yuan.
After a brief uptick, the benchmark Shanghai Composite was trading down 2.2% at 2613.3.
Ships collide in India
Teams from the Indian Navy and the Coast Guard attempt to contain an oil spill after a collision between two Panamanian cargo ships. Video courtesy of Reuters.
Banking stocks were among the leading declines, with Bank of Communications Co. /quotes/comstock/28c!e:601328 (CN:601328 6.30, -0.19, -2.93%) /quotes/comstock/11i!bkfcf (BKFCF 1.12, +0.09, +8.74%) giving up 2.5%, and Agricultural Bank of China Ltd. /quotes/comstock/28c!601288 (CN:601288 2.69, -0.04, -1.47%) losing 1.1% to 2.69 yuan (40 U.S. cents), a whisper above the 2.68 yuan price for its initial public offering last month. The energy sector was also under pressure, with shares of coal producer China Shenhua Energy Co. /quotes/comstock/28c!e:601088 (CN:601088 23.16, -0.82, -3.42%) /quotes/comstock/11i!cuaef (CUAEF 3.92, +0.09, +2.35%) trading down 2.9%.
"The market is probably worried about [domestic] growth slowing down, as showed by the import number," said Macquarie Securities' head of China economics Paul Cavey.
He said pressure on Beijing to allow the yuan to rise would likely increase in coming months. China's trade surplus grew more than expected last month, and many economists expect the U.S. trade deficit to widen.
Chinese customs data for July showed the monthly trade surplus at $28.7 billion, its highest level in 18 months, as exports rose 38.1% and imports gained 22.7%. See story on Chinese trade data.
"The problem is renewed pressure on the yuan and potential protectionist measures in the U.S. in the run-up to the [November] elections," Cavey said.
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