Mainland markets pulled apart by diverging CPI indicators

Stock markets on the Chinese mainland parted ways Tuesday in light trading after June inflation data cast a shadow over the country's economic outlook.

The Shanghai Composite Index edged up 7.18 points, or 0.37 percent, to finish at 1,965.45; while the Shenzhen Component Index declined 37.16 points, or 0.49 percent, to close at 7,600.47.

Combined turnover at the two exchanges sank to 116.57 billion yuan ($19.01 billion), down from Monday's 149.96 billion yuan.

China's official consumer price index (CPI) showed retail prices rising by 2.7 percent year-on-year in June, picking up from May's increase of 2.1 percent to reach a four-month high, according to information provided Tuesday by the National Bureau of Statistics. Meanwhile, China's producer price index (PPI), a measure of wholesale inflation, fell 2.7 percent year-on-year, marking the 16th straight month of decline, official data show.

According to analysts, rising inflation for shoppers and slumping ex-factory prices will complicate the work of financial authorities trying to balance the country's monetary policy. The split witnessed Tuesday at mainland bourses was seen stemming from conflicting predictions about whether regulators would ease or tighten up on liquidity conditions in the market.

The heavily weighted brewing and property sectors experienced some of the day's largest tumbles as their components dropped by averages of 1.24 percent and 0.65 percent respectively.

Chinese liquor giant Kweichow Moutai Co shed 1.59 percent to end at 192.05 yuan. China Vanke Co, a leading property developer, gave up 3.4 percent to end at 9.66 yuan.

On the upside, the cement sector was Tuesday's big winner, rising 2.2 percent as a whole. Xishui Strong Year Co surged to the daily limit to end at 7.91 yuan.

In topical realms, several online providers of financial information hit the 10-percent daily limit; including Shanghai Great Wisdom Co, which tapped out at 4.9 yuan.