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Hong Kong - Chinese stocks edged lower as falling energy shares countered a rally by rare-earth producers.
The Shanghai Composite Index dropped 0.2%, after declining the most in three weeks on Monday. Yantai Jereh Oilfield Services Group lost 5.2%. Xiamen Tungsten and China Northern Rare Earth Group High-Tech gained more than 2%.
The volume of shares traded on the gauge was 27% below the 30-day average.
The March rebound in mainland equities has slowed this month, with the benchmark index up less than 1% this month amid waning turnover as better economic data spur concern the government will refrain from adding stimulus.
The Shanghai gauge remains the worst performer globally this year, with a 14% drop. Prudence will feature more prominently in China’s monetary policy than last year, while a certain degree of looseness will be maintained, the Xinhua News Agency said in a commentary on Monday.
"Speculation the authorities will take steps to cut capacity as well as boost buying for state reserves is lifting rare-earth producers," said Shen Zhengyang, strategist at Northeast Securities in Shanghai.
"The ‘prudence’ note will have some impact on market sentiment as credit growth has been fueling stock gains and regulators may be concerned about over-leveraging."
The Shanghai Composite traded at 3 026.66 at 08:18. The Hang Seng China Enterprises Index climbed 1%, with CGN Power leading gains. The Hang Seng Index rose 0.7%.
