China stocks drift as investors keep guessing Trump's tariff intention

SHANGHAI, April 24 (Reuters) - China stocks drifted and Hong Kong shares fell on Thursday as Washington signalled a willingness to lower tariffs against China, but ruled out unilateral moves, bewildering investors over how the damaging Sino-U.S. trade war will evolve.

China's blue-chip CSI300 Index .CSI300 and the Shanghai Composite Index .SSEC both erased early gains to end the morning session down 0.1%.

Hong Kong benchmark Hang Seng Index .HSI dropped 1%, led by tech shares.

U.S. Treasury Secretary Scott Bessent said on Wednesday that high tariffs between the U.S. and China are not sustainable, as President Donald Trump's administration signalled openness to de-escalating the trade war. However, Bessent also said Trump would not make that move unilaterally.

"A trade war between China and the U.S. is a lose-lose situation. Common sense tells us the two nations will eventually come to the negotiation table and reach an agreement," wrote Bin Shi, head of China equities at UBS Asset Management.

"But the timing and extent remain to be seen... At this stage, many questions remain unanswered as tariff developments and potential investment implications change day by day."

Chinese President Xi Jinping "will definitely not make the first move. But if Trump's advisors can devise a face-saving off-ramp from the tariff war, Beijing will be a willing partner," said GavekalDragonomics.

Technology shares led the decline on Thursday.

In China, cloud computing .CSI931469, big data .CSI930902 and software companies .CSI932094 fell sharply.

In Hong Kong, the Hang Seng Tech Index .HSTECH tanked 2%, weighed down by heavyweights such as Alibaba 9988.HK, Meituan 3690.HK and SMIC 0981.HK.

But Chinese banking shares .CSI399986 rose, as the country's ministry of finance starts selling long-term treasuries as part of a $72 billion bank recapitalisation plan.

"This recapitalization gives big banks the room to manage non-performing loans, thereby promoting more lending and ensuring a stable capital market," said Bin of UBS Asset Management.