China's inflation in May came in lower than expected, offering more evidence that Asia's largest economy is stalling and suggesting more easing may be on the way.
"We haven't really seen any stabilization for growth in China yet," Johanna Chua, head of Asia economics and market analysis at Citigroup, told CNBC. "Even though lending rates are coming down, they need to come down lower to support growth."
China's consumer price inflation (CPI) rose 1.2 percent in May from the year-earlier period, slightly below the 1.3 percent forecast in a Reuters poll and below the 1.5 percent rise in April. Producer prices in May fell 4.6 percent from a year earlier; it had been expected to slide 4.5 percent in May, the Reuters survey showed. Producer prices eased 4.6 percent in April.
China's Shanghai Composite opened down 0.65 percent, while Hong Kong's Hang Seng index nursed a modest loss of 0.2 percent. Meanwhile, the Australian dollar dropped below $0.7700, from around $0.7712 prior to the data.