Stocks drop most in two weeks after surprise gain in foreign exchange reserves

Mainland stock indexes fell the most in two weeks as investors weighed foreign-exchange reserves data to gauge capital flows.

The Shanghai Composite Index slid 1.4 percent at the close. Central bank data released after the end of trading showed an unexpected increase in the forex reserves as the nation's currency steadied. Kweichow Moutai Co, the biggest Chinese liquor maker, retreated the most in three weeks. ZTE Corp slumped in Hong Kong as trading resumed following a one-month halt after the US government alleged it violated trade sanctions with Iran. The yuan strengthened in Shanghai.

"Market sentiment is still very weak," said Dickie Wong, an executive director at Kingston Securities Ltd. "Some economic data including China's official PMI slightly improved, but not significantly."