China stocks end higher as investors turn defensive after Xi-Trump deal

By Jiaxing Li

HONG KONG, Nov 3 (Reuters) - China stocks closed higher on Monday as investors continued to position defensively, while booking gains in the tech sector, after Chinese President Xi Jinping and U.S. President Donald Trump agreed to a trade deal last week.

The Shanghai Composite index .SSEC rose 0.6% to 3,976.52 points at market close, after swinging between gains and losses during the day. China's blue-chip CSI300 index .CSI300 added 0.3%.

Defensive sectors led the gains on Monday, with the CSI Energy Index .CSIEN added 3%, the banking sector .CSI399986 rising by 1.3% and the consumer staples sector .CSI000912 up 0.3%.

Tech-related shares tumbled, with the semiconductor sector .CSI931865 slumping as much as 4.2% and the tech-focused Star50 Index .STAR50 down 1%. The rare earth sector .CSI930598 slipped as much as 3.4%.

Sentiment appeared to be turning more defensive 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.

Hong Kong shares were steady. The Chinese H-share index listed in Hong Kong, the Hang Seng China Enterprises Index .HSCE rose 1%, while the Hang Seng Index .HSI was also up nearly 1% at 26,158.36.

Gold jewelries seller Laopu Gold 6181.HK tumbled 7.2%, leading losses in gold-related shares after China cut gold tax exemptions for some retailers which may curb buying.

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.