SHANGHAI, Sept 15 (Reuters) - Shanghai stocks fell on Friday to end the week lower, as a slew of soft data suggested the world's second-largest economy is starting to lose some momentum in the face of rising borrowing costs and government-mandated capacity cuts.
The disappointing data on Thursday took some of the shine off China's surprisingly robust growth in the first half of the year, which had sharply boosted corporate earnings.
The blue-chip CSI300 index ended little changed at 3,831.30 points, while the Shanghai Composite Index fell 0.5 percent to 3,353.62 points.
For the week, the CSI300 rose 0.1 percent, while SSEC slid 0.3 percent.
Fixed-asset investment, a key growth driver for China, grew 7.8 percent in January-August from a year earlier, the weakest pace in nearly 18 years, while factory output and retail sales also grew less than anticipated.
Analysts in particular singled out a slowdown in infrastructure investment as well as the impact of government moves to close mines and heavily-polluting factories to reduce air pollution.
But they added that while momentum may fade slightly, China's growth is expected to remain relatively robust through the rest of the year and easily beat the government's target of around 6.5 percent.
Cyclical stocks, which have rallied strongly this year on the back of China's economic recovery, were under selling pressure.
An index tracking raw material stocks dropped 1.7 percent, as investors dumped shares of steelmakers, coal miners and non-ferrous metals producers, many of which had seen a sharp run-up this year. The index is still up some 31 percent so far in 2017.
However, some analysts think the sell-off is overdone.
"This is irrational," wrote Ma Wenyu, strategist of Shanxi Securities.
Major resources companies will continue to benefit from China's tougher rules on pollution, he said, suggesting investors should seek bargains in undervalued stocks in sectors such as steel, aluminium, rare earth and paper-making.
Beijing is also keen to merge more state firms, with existing industrial giants seen gaining even more market share and pricing power.
Bucking the weaker trend, an index tracking major property developers gained 3 percent, with bellwether China Vanke jumping 6.3 percent to a record high.
The index has advanced 6.2 percent this week, bolstered by data showing activity in the property market snapped back in August despite a series of government curbs. (Reporting by Luoyan Liu and John Ruwitch; Editing by Kim Coghill)