Stocks fall as China cuts rates

Hong Kong stocks retreated as investors expressed concerns that Beijing's latest rate cuts did not go far enough to boost confidence amid a weakened economy.

The Hang Seng Index fell 306 points to 19,607 points, led by a 17 percent plunge in WuXi Biologics (Cayman) (2269).

The loss was partially cushioned by a 7.9 percent jump in the share price of CLP (0002) after investment bank Macquarie was reported to be potentially acquiring up to a 50 percent stake in CLP's electricity and gas supplier EnergyAustralia.

Meanwhile, Cathay Pacific Airways (0293) received a boost after BofA Securities upgraded the company's rating to buy, gaining 5.6 percent to HK$8.16. BofA raised Cathay's target price by 51 percent to HK$10, saying many positive factors were not yet reflected in the price.

The Hang Seng China Enterprises Index closed 121 points lower at 6,654 while the Hang Seng Tech Index dropped 103 points or 2.5 percent to close at 4,075.

The declines came as the People's Bank of China cut the one-year and five-year loan prime rates by 10 basis points in its first reductions in 10 months in a bid to shore up a slowing economy.

Some economists had predicted a 15 bps cut in the five-year rate to support the property market.

The decision knocked the yuan lower, with the offshore yuan falling 0.2 percent to trade at 7.1827 per US dollar.

The official Securities Daily said China's gross domestic product growth may reach 7 percent in the second quarter and 6 percent in the first half while HSBC Assets Management cut its full-year growth forecast to 5.3 percent from 6.3 percent.