5:00 PM Shanghai – Stocks in Shanghai fell after China reported its first monthly trade deficit in nearly a year as imports rose at a faster pace than exports. For the two months to February China slipped into a deficit. Automakers declined after February auto sales rose 2.9% from a year ago.

Stocks in Hong Kong declined sharply after People’s Bank of China conducted its monetary operation and international markets sentiment was weak. China also reported its first monthly trade deficit in a year and the largest in seven years.

China reported February trade deficit of $7.3 billion as the growth in exports and imports declined during the Chinese New Year holidays.

Monthly exports increased 2.4% in the month after surging 19.4% in January and imports soared 37.7% in the month after expanding 51% in January.

For the two months together the exports increased 21.3% to $247.5 billion and imports increased 36% to $248.4 billion and net deficit of $900 million.

China is expected to return to surplus from March and for the year trade surplus is expected to be near $150 billion.

China’s trade surplus has declined to $183 billion in 2010 from nearly $196 billion 2009.

Investors also stayed on the sidelines ahead of the planned protests in Saudi Arabia and oil prices hovered near the recent highs in London and New York. Nymex Crude oil futures traded at $105 a barrel and Brent crude oil fetched $116 a barrel.

The Shanghai Composite Index declined 45.01 or 1.5% to 2,957 and the CSI 300 index fell

Hang Seng index dropped 0.8% or 195.22 to 23,615.11.

Trading volume in Hong Kong declined 7% and investors stayed on the sideline ahead of inflation data tomorrow.

China auto sales increased at the slowest pace in February since January 2009. Wholesales of automobiles increased 2.6% to 967,200 units according to the China Association of Automobile Manufacturers.

Stock Movers

HSBC stock fell 1.4% and banks were lower in trading after China drained liquidity from the credit markets to stem the short term inflation.

Port operators in Hong Kong trading gained. Hutchison Whampoa Ltd increased 0.8% after media talks suggested that Singapore listing of its port unit is attracting strong results.

Cosco Pacific Ltd increased 4.7% in Hong Kong and China Cosco Holdings Co decreased 2.7% to 10.66 yuan in Shanghai.

China Coal Energy Co. decreased 3% to 11.17 yuan and Citic Securities Co fell 4% to 14.60 yuan.

Maanshan Iron & Steel Co decreased 2.45 to 3.75 yuan after steelmakers fell in a market sell off.

Automakers in China declined on the slowest growth in monthly sale in more than a year and an increase in oil prices.

Dongfeng Motor declined 2.8% to HK$13.80 and Weichai Power Co fell 1.4% to HK$50.35. Guangzhou Automobile Group Co decreased 3.7% to HK$9.63.