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China shares end lower amid speculation of policy tightening

* SSEC -1.51%, CSI300 -2.01%

* Biggest one-day drop for CSI300 since September

* Short-term rates spike as speculation rises of PBOC tightening bias

SHANGHAI, Jan 26 (Reuters) - China’s blue-chip stock index fell on Tuesday, marking its biggest daily loss since September after touching a 13-year high in the previous session, amid tightening liquidity conditions and Sino-U.S. tensions.

** At the close, the Shanghai Composite index was down 1.51% to 3,569.43, its biggest daily drop since Dec. 22. ** The blue-chip CSI300 index tumbled 2.01%, its biggest one-day loss since Sept. 9. ** The CSI300 financial sector sub-index fell 1.71%, the consumer staples sector lost 1.11%, and the healthcare sub-index dropped 3.04%. ** Financial firms came under pressure against a backdrop of tightening liquidity conditions. Short-term rates jumped to pre-COVID levels on Tuesday, with some investors speculating that the central bank might adopt a tightening bias in its monetary policy. ** China-U.S. relations continue to weigh on sentiment. China said on Tuesday it will conduct military exercises in the South China Sea this week, just days after Beijing bristled at a U.S. aircraft carrier group’s entry into the disputed waters. ** U.S. President Joe Biden wants to approach relations with Beijing with “patience,” the White House said on Monday. ** Meanwhile, index provider MSCI Inc said it will delete securities of five Chinese companies - including three Shanghai-listed firms - from some indexes as of the close on Jan. 27 in the absence of any guidance. ** China Shipbuilding Industry fell 1.68%, China National Nuclear Power dipped 0.2% and China National Chem lost 0.52%. ** The smaller Shenzhen index ended down 1.99% and the start-up board ChiNext Composite index was weaker by 2.88%. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.33%, while Japan’s Nikkei index closed down 0.96%. ** At 07:10 GMT, the yuan was quoted at 6.4753 per U.S. dollar, 0.07% firmer than the previous close of 6.4798. (Reporting by Andrew Galbraith; Editing by Subhranshu Sahu)

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