SHANGHAI, Data HK June 5 (Reuters) – China’s blue-chips dropped on Monday as Sino-U.S.
tensions overshadowed optimism from a private-sector survey that showed services activity in the world’s second-largest economy accelerated last month, although Hong Kong shares edged higher.

** China’s blue-chip CSI300 Index dropped 0.5% by the midday recess, while the Shanghai Composite Index edged 0.1% higher.

** Hong Kong’s benchmark Hang Seng was up 0.5% and the Hang Seng China Enterprises Index added 0.2%.

** Most other Asian stock markets extended a global rally on optimism the Federal Reserve would pause its rate hikes this month after a mixed U.S.

jobs report, while oil prices jumped after Saudi Arabia pledged big output cuts.

** The Caixin/S&P Global services purchasing managers’ index (PMI) rose to 57.1 in May from 56.4 in April, as a rise in new orders shored up economic recovery in the second quarter.

** China property stocks retreated from a rally seen on Friday amid speculations that policymakers will roll out stimulus policies to bolster the battered sector.

** “We see outperformance of Chinese equities resuming in 2H23 as easing steps up, macro recovery broadens out and geopolitics stabilize. Stay OW on China within EM/APxJ but trim active risk,” according to a note from Morgan Stanley.

** China’s CSI 300 Real Estate Index fell 1.5%, and Hong Kong’s Hang Seng Mainland Properties Index declined 1.6%.

** Consumer staples lost 1.6% and new energy stocks declined nearly 2% even after state media reported that China will extend and optimise a purchase tax exception on new-energy vehicles.

** Chinese Defence Minister Li Shangfu said on Sunday the conflict with the U.S.

would be an “unbearable disaster”, but that his country seeks dialogue over confrontation.

** China’s military rebuked the United States and Canada for “deliberately provoking risk” after the countries’ navies staged a rare joint sailing through the sensitive Taiwan Strait.

** Tech giants listed in Hong Kong edged 0.1% higher.

(Reporting by Shanghai Newsroom; Editing by Sherry Jacob-Phillips)