Hong Kong blue chips fell by as much as 200 points Thursday morning after release of high Chinese January inflation numbers indicated China would slow its recent credit-loosening moves.
Hong Kong blue chips retreated from the key 21,000 level for the second time this week, spooked by a delay in implementation of a deal on Greece's debt crisis.
After weeks of volatility, China stocks have hit a critical point and could be on a downtrend. China's announcement it was scaling back its GDP target for 2012 hurt sentiment.
China and Hong Kong stocks traded lower, burdened by losses in U.S. and European markets and technical selling after blue chips fell below the 250-day moving average.
China and Hong Kong stocks tumbled after the HSBC preliminary manufacturing PMI fell sharply to 48.0, indicating slowing growth in China. Resources stocks posted steep losses.
Hong Kong and Chinese stocks opened higher despite the sharp drop on Wall Street and ended a day of volatile trading with a slight gain. Export-oriented stocks dropped on EU worries.
Following a steep decline in the U.S., Hong Kong blue chips opened lower and at one time were down 200 points. Turnover was thin, reflecting weak momentum.
The Hong Kong market rose sharply due to gains in Hong Kong-listed ADRs in the U.S. on Friday and to optimism Europe would solve its debt crisis at a regional summit on Wednesday.
Stocks rallied back from yesterday's decline but mixed earnings and uneasiness in Europe could mean additional drops. Apple surprised Wall Street with an uncharacteristic miss in Q4.
Wall Street closed out a week of strong gains as investors peg hopes on a resolution in Europe and earnings season continues to produce favorable results.
A strong rise in Asian markets helped Hong Kong and China stocks extend this week's powerful rally on robust turnover. But massive gain could provide mixed signals ahead.
Chinese blue chips found early support at 19,000, news that China's "big four" banks had increased new loans the last two weeks triggered a strong rebound in higher turnover.