Steelmakers drag China stocks lower as U.S. imposes tariffs

SHANGHAI, March 2 (Reuters) - China stocks fell on Friday, weighed down by steel and aluminium makers after U.S. President Donald Trump announced hefty tariffs on import of the metals, sparking concerns of a global trade war.

Investors were also cautious ahead of next week's National People's Congress (NPC) gathering in Beijing, and are increasingly concerned about the risks of faster U.S. interest rate hikes.

The blue-chip CSI300 index fell 0.8 percent to 4,016.46 points, while the Shanghai Composite Index lost 0.6 percent to 3,254.53.

For the week, CSI300 was down 1.3 percent, while SSEC declined 1 percent.

Major steel maker Baoshan Iron & Steel fell 3.9 percent, while Aluminium Corp of China was 2 percent lower.

Though China exports relatively little steel to the United States, it is firmly in the crosshairs of the Trump administration on a number of other issues ranging from tinfoil to intellectual property rights.

Chinese investors had already been squaring positions ahead of the NPC meeting next week, at which key economic targets and policy objectives will be announced.

Oxford Economics expects the government will announce further tightening of financial and regulatory policies for 2018, while targeting modestly slower growth of credit and GDP.

Frank Benzimra, Hong Kong-based head of Asia Equity Strategy at Societe Generale, said there are two key issues on investors' minds: the high valuation of some large segments of the Chinese market, such as consumer discretionary and technology, as well the financial deleveraging execution risk.

In addition, "there has always been a policy risk in China whether we invest in private firms or SOEs," he said.

Beijing has increased scrutiny on several acquisitive Chinese private conglomerates. The government took over Anbang last week, and is investigating chairman of CEFC China Energy, a source said on Thursday.

Even as CEFC said it was "operating normally", shares in affiliated CEFC Anhui International Holding slumped 3.88 percent on Friday, extending Thursday's drop. (Reporting by Shanghai Newsroom; Editing by Kim Coghill)