** China's blue-chip CSI 300 Index dropped 0.4% by the lunch break, while the Shanghai Composite Index lost 0.3%.
** Meanwhile, Hong Kong's Hang Seng benchmark was up 0.2%, and the China Enterprises Index slid 0.1%.
** China's consumer price index (CPI) in February was 1.0%
higher than a year earlier, rising at the slowest pace in a
year. That compared with the 2.1% annual rise seen in January.
** "The market expected the CPI inflation to decline, but it
dropped much more than expected. This casts doubt on the
strength of domestic demand recovery in the household sector,"
said Zhiwei Zhang, president at Pinpoint Asset Management.
** Nomura said the low CPI inflation reflected a significant
slowdown in exports, a sharp contraction in land sales and
property markets, and a slow recovery in tourism.
* "The inflation downside surprise could slightly raise the
probability of a moderate rate cut in the next couple of
months," Ting Lu, chief China economist at Nomura said in a
note.
** Also dampening sentiment, President Xi Jinping said on Wednesday that China needs to improve its use of defence resources such as technology, supply chain and national reserves "to strengthen its army and win wars".
** China food and beverage stocks declined 1.3%
and tourism shares lost 1.1%.
** China semiconductor stocks extended gains on
news that a Chinese company has started to commercialise
photoresist - a key, light-sensitive material used for
manufacturing chips. Shenzhen Ronda Photosensitive & Technology
Co , which made the announcement, rose as much as 20%
for a second consecutive day.
** Meanwhile, China superconductor stocks surged on reports
of a scientific breakthrough.
** Hong Kong market had mixed sector performance, with the
healthcare sector up 0.7% and utilities shares down 1.2%. The Hang Seng Tech Index barely moved.
(Reporting by Shanghai Newsroom; editing by Eileen Soreng)
