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China shares down as consumer firms weigh; Hang Seng slips 0.65%

* SSEC -0.53%, CSI300 -1.09%, HSI -0.65%

* Consumer staples firms down 3% as distillers drag

* Foreign investors are net sellers through Stock Connect

SHANGHAI, April 7 (Reuters) - China’s main equity gauges fell on Wednesday, as the consumer staples and financials sectors dragged and as foreign investors sold A-shares, with recent strong economic data continuing to fuel investor concerns over possible policy tightening.

** At the midday break, the Shanghai Composite index was down 0.53% at 3,464.54 points. The blue-chip CSI300 index was down 1.09%. ** Consumer staples firms led losses, falling 3% after rallying nearly 6.5% last week. The financial sector sub-index dipped 0.61% and healthcare firms shed 1.11%. ** Index heavyweight distiller Kweichow Moutai Co Ltd , a favourite of foreign investors, was the biggest drag on Wednesday, falling 3.12%. Fellow distiller Wuliangye Yibin Co Ltd fell 4.73%. ** Foreign investors were net sellers of A-shares on Wednesday, with Refinitiv data indicating outflows via the Stock Connect programme through Hong Kong. ** Analysts say that strong economic data could prompt authorities to tighten policy, putting pressure on equity valuations. ** “We can’t rule out the possibility that policymakers may move as early as late this year to tighten monetary policy, potentially triggering knock-on effects in both the real economy and financial markets,” Christina Zhu, economist at Moody’s Analytics said in a note. ** Chinese H-shares listed in Hong Kong fell 1.07% to 11,097.9, while the Hang Seng Index was down 0.65% at 28,751.38. ** The smaller Shenzhen index was down 0.79%, the start-up board ChiNext Composite index was weaker by 1.36% and Shanghai’s tech-focused STAR50 index was down 0.46%. ** The yuan was quoted at 6.5418 per U.S. dollar, 0.01% weaker than the previous close of 6.5409. ** In Hong Kong, the sub-index of the Hang Seng index tracking energy shares rose 0.2% while the IT sector fell 1.8%. (Reporting by Andrew Galbraith; Editing by Shailesh Kuber)

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