[R]6:00AM New York, 6:00PM Hong Kong – Hong Kong stocks fall 1.8%. China’s futures trade volume gains 142% to Rmb35 trillion in first half.[/R]

Stocks in Hong Kong fell as investors were wary of negative earnings forecasts from companies after Cathay Pacific cautioned that its first half earnings will be below market projections.

Market Sentiment

In Hong Kong trading Hang Seng Index fell 1.80% or 397.56 at 21,704.45, and the China Enterprises Index or Hong Kong listed mainland shares, or H shares, slumped 2.53% or 300.83 at 11,608.92. In Shanghai trading CSI 300 Index gained 0.05% or 1.25 at 2,699.60. Talks of large loss of 12 billion yuan or $2.45 billion in a fund managed by Ping An Insurance on the mainland sparked a flurry of sell orders in insurance companies.

Ping An Insurance fell daily limit of 10% or 4.8 yuan to 43.04 yuan and China Life fell 1.12 or 5% to 21.14 yuan.

China’s Trade Volume Tops Rmb35 Trillion

Xinhua News Agency reported today that China Futures Association said China’s futures trade volume advanced 142% to Rmb35 trillion in the first half of the year. Nationwide contracts in the futures markets gained 148% to 577 million.

Futures volumes surged on improved domestic market environment and volatile domestic farm product prices lifted by a rise in world grain prices.

ICBC Provides Rmb8.06 billion For Sichuan

Industrial and Commercial Bank of China said it has provided Rmb8.06 billion in loans to companies and public utilities for reconstruction in the aftermath of the earthquake that hit Sichuan Province.

The report notes that the ICBC has signed a financing agreement with the municipal government of Chengdu for supporting reconstruction projects. Statistics reveal that China’s financial agencies had issued a total Rmb52.95 billion in reconstruction loans by Sunday.

Beijing also allocated Rmb54.82 billion to a disaster relief fund that includes Rmb49.71 billion from the central budget and the remainder from local budgets.

China’s Economy Set to Cool

The online edition also reported that the macro economy index chart- filed by the National Bureau of Statistics- was unchanged from the previous four months at 113.3 from 120 recorded in September to December period last year.

In addition, the chart indicated that there is lingering inflationary pressure in the economy.

However, the May index projected economic growth dropped 0.15 points from April to 102.35 in May, intimating that the economy will cool further.

Beijing has been tightening its monetary policy since the beginning of the year.

Gainers & Losers

Cathay Pacific plunged 5.9% and Swire Pacific tumbled 5.7%.

Aluminum Corp of China fell after saying it projects interim profit will drop 50% after snowstorms impacted on output. Zijin Mining spiked 3.6% after metal prices extended their ways.