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Rally May Stall For China Stock Market

The China stock market has closed higher now in consecutive trading days, rising almost 45 points or 1.8 percent en route to a fresh seven-week closing high. The Shanghai Composite finished just above the 2,440-point plateau, although now investors are looking downside pressure when the market kicks off trade on Friday.

The global forecast for the Asian markets suggests consolidation, with investors waiting on the sidelines ahead of the closely watched employment report from the United States later in the day. Adding to the cautious sentiment are comments from European Central Bank President Mario Draghi, who said that the euro area faces economic uncertainty despite signs of stabilization in the first quarter. The European and U.S. markets finished lower, and the Asian bourses are expected to follow that lead.

The SCI finished slightly higher on Thursday as gains from the brokerages were offset by weakness from the property sector.

For the day, the index added 1.64 points or 0.07 percent to finish at 2,440.08 after trading between 2,427.73 and 2,441.95. The Shenzhen Composite Index collected 5.76 points or 0.6 percent to end at 961.99.

Among the actives, Industrial and Commercial Bank of China shed 1.4 percent, while Bank of China eased 0.3 percent, China Construction Bank lost 0.6 percent, China Vanke dropped 2.0 percent, Poly Real Estate Group fell 0.4 percent, CITIC Securities jumped 2.8 percent and Haitong Securities climbed 2 percent.

The lead from Wall Street is negative as stocks moved mostly lower on Thursday, with traders reacting negatively to a mixed batch of U.S. economic data. Caution ahead of Friday's closely watched monthly jobs report also contributed to some risk aversion.

Stocks came under pressure when the Institute for Supply Management said its non-manufacturing index dropped to 53.5 in April from 56.0 in March. While a reading above 50 indicates continued growth in the service sector, the drop surprised economists, who had expected the index to come in unchanged.

Meanwhile, the markets largely shrugged off a Labor Department report showing a bigger than expected drop in initial jobless claims in the week ended April 28. Jobless claims fell to 365,000 from the previous week's revised figure of 392,000. Economists had expected jobless claims to dip to 378,000 from the 388,000 originally reported for the previous week.

Among individual stocks, Green Mountain Coffee (GMCR) plunged 47.8 percent after the specialty coffee company reported second quarter earnings in line with estimates but slashed its full year guidance.

Auto giant General Motors (GM) also ended the day in the red despite reporting first quarter adjusted earnings that exceeded analyst estimates. GM said its revenues for the quarter rose 4 percent. A strong performance in North America helped to offset losses in Europe.

The major averages climbed off their worst levels going into the close but still ended the day firmly in the red. The Dow fell 61.98 points or 0.5 percent to finish at 13,206.59, while the NASDAQ dropped 35.55 points or 1.2 percent to end at 3,024.30 and the S&P 500 slid 10.74 points or 0.8 percent to 1,391.57.

In economic news, China will on Friday see the results of the HSBC Services PMI for April; it had a score of 53.3 in March.

Also, China's non-manufacturing sector growth slowed in April, a survey by the China Federation of Logistics and Purchasing and the National Bureau of Statistics showed Thursday. The headline purchasing managers' index fell to 56.1 in April from 58 in March. A PMI reading above 50, however, points to growth in activity. The new orders index fell by 0.8 points to 52.7 during the month. Input price index fell 2.3 points to 57.9.

by RTTNews Staff Writer

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