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Euro Zone Worries Seen Weighing on China Stocks

China stocks may consolidate on Tuesday in the wake of European market losses.

Shanghai stock exchange
Xu Changzheng | ChinaFotoPress | Getty Images
Shanghai stock exchange

The Shanghai Composite Index lost 0.59 percent on Monday to close at 2380.73 amid busier turnover, as slowdown concerns and European uncertainties outweighed upside from the weekend cut in China's required bank reserves. Property stocks outperformed, while banks lost ground.

Market Factors:

China's Ministry of Finance announces the local government bond issuance pilot program will continue, but it will not be widened to include other cities and provinces — the current pilot includes Zhejiang, Guangdong, Shenzhen, and Shanghai — as previously expected. It is a sign of caution towards local government finances.

Stocks to Watch:

Vanke - Property developer Vanke (through subsidiary Wkland Investments) has bought a 74 percent stake in Hong Kong-listed Winsor Properties for HK$1.1 billion (US$141.6 million). While the company said the deal was small and wouldn't have a material impact on its business, this is Vanke's first foray to expand internationally.

China Life - The insurance giant said January-April premiums fell 8.5 percent to 133 billion yuan (US$20.9 billion). This compares with a 7.5 percent fall in the first quarter, showing deterioration of its insurance business in April.

—By CNBC’s Cheng Lei