China stocks flat as investors take gains after Trump-Xi deal

By Jiaxing Li

HONG KONG, Nov 3 (Reuters) - China stocks were flat on Monday as investors continued to consolidate gains and position defensively after Chinese President Xi Jinping and U.S. President Donald Trump agreed to a trade deal last week.

At the midday break, the Shanghai Composite index .SSEC edged up 0.05% at 3,956.72 points after swinging between gains and losses during the morning.

China's blue-chip CSI300 index .CSI300 was down 0.5%.

Investors appeared to be cashing out gains following the much-anticipated Trump-Xi meeting.

The deal includes U.S. tariff reductions and a pause in Beijing's new restrictions on exports of rare earth minerals and magnets, extending a delicate trade truce between the world's two largest economies.

"Some have started taking gains after a very good run," despite remaining bullish on the "Fed put/Trump put" optimism and China's technological advances, Bank of America said in a note to clients.

"We advise investors to lock in some gains on the rises and accumulate on the corrections, and rotate into more defensive positioning toward year end," they said.

Defensive sectors cushioned the markets on Monday, with the CSI Energy Index .CSIEN gaining nearly 3%, the banking sector .CSI399986 higher by 1.4% and the consumer staples sector .CSI000912 up 0.1%.

Tech-related shares tumbled, with the semiconductor sector .CSI931865 index slumping as much as 4.2% and AI-related shares weakening 1.3%. The rare earth sector .CSI930598 slipped as much as 3.4%.

Hong Kong shares were steady. The Chinese H-share index listed in Hong Kong, the Hang Seng China Enterprises Index .HSCE rose 0.7% to 9,231.30, while the Hang Seng Index .HSI was up 0.6% at 26,057.03.

On the data front, China's factory activity in October expanded at a slower pace as new orders and output both waned amid tariff anxiety, a private-sector survey showed on Monday.