CHINA’S stocks tumbled yesterday, following weak inflation data over the weekend and continuing investor anxiety over the economy and the trajectory of the yuan.

    The CSI300 Index of the largest listed companies in Shanghai and Shenzhen fell 5 percent to 3,192.45, while the Shanghai Composite Index lost 5.3 percent to 3,016.70 points.

    China’s factory gate deflation extended into a 46th month in December, data over the weekend showed, while there was little evidence of the State-backed fund buying that helped shore up equities on several days last week. Shares declined even after the yuan gained on a stable fixing from the central bank.

    Policymakers removed new market circuit breakers from Friday after blaming them for exacerbating declines that wiped out at least US$1 trillion this year. China’s producer price index (PPI) slumped 5.9 percent in December from a year earlier.

    “Pessimism is the dominant sentiment,” said William Wong, head of sales trading at Shenwan Hongyuan in Hong Kong. “The PPI figure confirms the economy is mired in a slump. Market conditions will remain challenging given weak growth, volatility in external markets and the yuan’s depreciation pressure.”

    China’s economic outlook has been dimmed by market volatility and slowing exports, which declined 6.8 percent in November from a year earlier. The official purchasing managers index signaled weakness for a fifth straight month in December, keeping the manufacturing gauge near a three-year low.

    While the government helped boost stocks at least twice last week, equities extended declines into the close yesterday.

    PetroChina Co., long suspected to be a target of State-backed fund buying because of its large weighting in the Shanghai Composite, sank 3.6 percent. (SD-Agencies)