SHANGHAI, Oct 14 (Reuters) - China stocks were mixed on
Thursday as investors turned cautious about the country's
monetary policy trajectory as factory gate inflation hit record
highs, while new bank lending fell short of expectations.
** At the midday break, the Shanghai Composite index
was up 0.15% at 3,567.14 points, while the blue-chip CSI300
index was down 0.31%.
** China's annual factory gate prices grew at their fastest
pace on record in September, driven by energy curbs and soaring
commodity prices, piling pressure on businesses already
grappling with supply bottlenecks.
** "We think the risk of stagflation is rising in China as
well as the rest of the world," said Zhiwei Zhang, chief
economist, Pinpoint Asset Management. "The ambitious goal of
carbon neutrality puts persistent pressure on commodity prices,
which will be passed to downstream firms."
** "Persistent inflationary pressure limits the potential
scope of monetary policy easing," he added.
** Some economists believe more monetary and fiscal support
are needed after official data on Wednesday showed that new bank
lending in China accelerated in September from the previous
month but fell short of expectations.
** The financial sub-index eased 0.9%, the
consumer staples sector fell 1%, the real estate
index dropped 2.71% and the healthcare sub-index
** However, the aviation sector outperformed the market on
hopes of new COVID-19 treatments leading to a rebound in travel
** Air China Ltd gained as much as 6.5%, while
Shanghai International Airport, Juneyao Airlines
, Spring Airlines, China Southern
Airlines and China Eastern Airlines also
** Merck & Co said it had applied for U.S. emergency
use authorization for its drug to treat mild-to-moderate
patients of COVID-19, putting it on course to become the first
oral antiviral medication for the disease.
** Hong Kong's financial markets are closed for the Chung
Yeung Festival on Thursday.
(Reporting by the Shanghai Newsroom; Editing by Ramakrishnan