Mainland stocks sag after soft service sector report

Chinese mainland stocks fell Thursday after a private survey showed the country’s services sector cooled in July and as a net drain of funds by the central bank renewed concerns about liquidity conditions.

The CSI300 index fell 0.88 percent to 3,727.83 points, while the Shanghai Composite Index lost 0.37 percent to 3,272.93, slipping from Wednesday’s eight- month intraday high.

China’s services sector expanded at a slightly slower pace in July as new business growth eased, a private business survey showed Thursday.

The findings were in line with an official gauge of the non- manufacturing sector published Monday which also showed growth in services cooled, adding to views that China’s economy could slow slightly in coming months after a strong start to the year.

The survey undermined market sentiment as the Shanghai Composite was approaching a key technical level, market participants said.

“The [ Shanghai index] is now trading near the 3,300- level, which is a key mark and could take much time to break through,” said Zhang Gang, analyst with China Central Securities.

Concerns about tighter liquidity also dampened activity. China’s central bank on Thursday drained a net 20 billion yuan ($ 2.97 billion) via its open market operations, its first net drain since July 13.

Losses were led by banking and real estate stocks. With the exception of materials which continued to outperform and rose 1 percent, all other sectors fell across the board.