Lion Corp gets Bursa nod to list 950m new shares

KUALA LUMPUR (Jan 5): LION CORPORATION BHD [] has received Bursa Malaysia Securities Bhd's approval to list up to 950 million new shares to settle the overdue amount owed by its 79% subsidiary Megasteel Sdn Bhd.

The company said on Thursday Bursa Securities had also approved the proposed share consolidation.

However, the approvals were subject to conditions, wherein Lion Corp must fully comply with the relevant provisions under the Main Market Listing Requirements of Bursa Securities.

To recap, the 950 million new shares was to settle the RM950 million due by Megasteel to the unsecured trade creditors with an overdue amount of RM500,000 and above as at April 30, 2011.

This settlement would involve the issuance of one new share at par value of RM1 Lion Corp share and deferred cash payment of 20 sen for every RM1 of the overdue amount.

Lion Corp had said the proposed capital reCONSTRUCTION [] involved the proposed reduction of the par value of the existing LionCorp shares of RM1 each to 20 sen each by cancelling 80 sen.

This would be followed by the proposed consolidation of every five Lion Corp shares of 20 sen each into one share of RM1 each after the capital reduction was completed.

Can-One says unaware of unusual market activity

KUALA LUMPUR (Jan 5): CAN-ONE BHD [], whose share price surged on Thursday, told Bursa Malaysia Securities it was unaware of the reasons for the unusual market activity (UMA).

Can-One surged 31 sen to close at RM1.37 with 6.95 million shares done.

In its reply to Bursa Securities' query, it said there was no corporate development relating to the group's business and affairs that had not been previously''announced that may account for the UMA.

'We are not aware of any rumour or report concerning the business and affairs of Can-One group that may account for the UMA,' it said.

DBS says probing unauthorised withdrawals in Malaysia

SINGAPORE (Jan 5): DBS Group Holdings said on Thursday it is investigating complaints from customers of unauthorised withdrawal of funds in Malaysia, through the use of the bank's debit and automated teller machine (ATM) cards.

The bank said it immediately de-activated the compromised cards and is taking steps to compensate these customers in full.

It did not disclose the number of customers affected or the amount of funds withdrawn.

'We are treating the matter with utmost priority and would like to assure customers that they will be fully compensated, for any unauthorised withdrawals, within 24 hours,' Jeremy Soo, head of consumer banking group Singapore, DBS Bank, said in a statement.

'Investigations are currently underway and we are presently validating all ATM/Debit card transactions made in Malaysia over the past few days,' he said. - Reuters

Khaznah, Temasek in talks with bank to finance Singapore projects

PUTRAJAYA (Jan 5): Khazanah Nasional Bhd (Khazanah) and Temasek Holdings (Pte) Ltd (Temasek) are currently in the midst of discussions with
banks to provide financing for M+S Pte Ltd development projects in Singapore.

M+S, a company owned 60:40 by Khazanah and Temasek respectively, is set to develop land parcels in Marina South and Ophir-Rochor with an estimated gross development value of RM27 billion (S$11 billion).

The developments in these areas are expected to be completed over the next six years, with CONSTRUCTION [] expected to commence in 2013, according to a joint statement released by Khazanah and Temasek after the bilateral meeting between Prime Minister Datuk Seri Najib Tun Razak and his Singapore counterpart Lee Hsien Loong here on Thursday.

It added that M+S has appointed architects and consultants for the Marina South and Ophir-Rochor developments and submitted the designs for provisional planning approvals in the last quarter of last year.

Meanwhile, Pulau Indah Ventures Sdn Bhd (Pulau Indah), a 50:50 joint venture between Khazanah and Temasek, will develop the 'Urban Wellness' project on a 2.02 ha site in Medini North.

It will also develop the 85.5 ha 'Resort Wellness' project in Medini Central.

The gross development value of the projects, which include the development of a wellness centre, serviced residences, a corporate training centre,
commercial, retail and residential and wellness-related offerings, is estimated at approximately RM3.0 billion.

For the Urban Wellness project, Pulau Indah has appointed CapitalLand as project manager via the exchange of the Project Management Agreement.

The project is expected to commence in 2013 and completed over the next four years.

For the Resort Wellness project, Pulau Indah and an indirect wholly-owned subsidiary of Eastern and Oriental Berhad (E&O), had exchanged the Shareholders' Agreement in relation to Nuri Merdu Sdn Bhd, the 50:50 joint venture vehicle for the Resort Wellness project.

E&O will also carry out the project management and marketing for the Resort Wellness site.

The architect, master planner and key consultants havwe been selected for the project, with the initial phase expected to commence in 2013 and the whole project to be completed in five years.

Earlier, Najib and Lee were briefed on the concept for both the Urban Wellness and Resort Wellness developments. - Bernama

KLCI snaps losing streak, closes 0.68% higher

KUALA LUMPUR (Jan 5): The FBM KLCI snapped its losing streak on the third trading day of 2012 and closed in the positive territory for the first time in the New Year, lifted by gains at banking and select blue chip stocks.

The FBM KLCI gained 10.21 points to close at 1,514.43.

Gainers beat losers by 467 to 325, while 324 counters traded unchanged. Volume was 1.67 billion shares valued at RM1.46 billion.

However, whether the index would be able to sustain its gains on Friday remains uncertain as most Asian markets closed in the negative territory while European indices fell in early trade on Thursday.

At the regional markets, Hong Kong's Hang Seng Index added 0.46% to 18,813.41, Taiwan's Taiex gained 0.68% to 7,130.86 and Singapore's Straits Times Index edged up 0.07% to 2,713.02.

Meanwhile, the Shanghai Composite Index fell 0.97% to 2,148.45, Japan's Nikkei lost 0.83% to 8,488.71 while South Korea's Kospi shed 0.13% to 1,863.74.

Concern about the appetite for euro zone sovereign debt pushed European stocks lower and hit the single currency on Thursday, with the first French bond auction of 2012 set to test how much progress policymakers have made in easing tensions, according to Reuters.

The price France has to pay to sell 7 to 8 billion euros of longer-term bonds will measure how much relief markets have taken from the EU leaders' December plan for resolving the crisis and the near half-trillion euros pumped into the region's banks by the European Central Bank, it said.

On Bursa Malaysia, KLK jumped RM1.76 to RM25.26, Dutch Lady gained RM1 to RM24, Can-One 31 sen to RM1.37, Nestle 30 sen to RM56.30, Timwell 28 sen to RM1.08, BHIC and Boxpak 26 sen to RM4.11 and RM2.52, Carlsberg and MISC 23 sen each to RM8.71 and RM5.96, while BLD PLANTATION []s was up 22 sen to RM7.60.

Among banking stocks, CIMB rose six sen to RM7.16, RHB Capital five sen to RM7.33, Affin seven sen to RM3.09, HLFG four sen to RM11.56, while Maybank and Public Bank gained two sen each to RM8.29 and RM13.16.

Decliners were led by RIC that lost 35 sen to RM1.45, BAT 14 sen to RM49.66, IGB 10 sen to RM2.48, Genting Plantations and IJM Corp eight sen each to RM8.60 and RM5.46, Malayan Flour Mills and WCT seven sen each to RM7.16 and RM2.18, while Mahajaya and AFG fell six sen each to 62 sen and RM3.89.

The actives included XDL, JCY, Proton, Versatile and Astral Supreme.

SapuraCrest unit inks contracts worth RM712.78 million

KUALA LUMPUR (Jan 5): SAPURACREST PETROLEUM BHD [] has secured two contracts worth combined US$227 million (RM712.78 million) to build two units pipelay cum heavylift offshore CONSTRUCTION [] vessels.

It said on Thursday that its unit TL Offshore Sdn Bhd had finalised the contracts with Cosco (Nantong) Shipyard Co. Ltd.

SapuraCrest said both parties had agreed that the contract be effective from Sept 10, 2011.

It said one of the Vessels was scheduled to be delivered in the fourth quarter of 2013, whilst the other vessel to be delivered in the first quarter of 2014.

Maxbiz: RM510m LOI based on RM5,100 per connection to 100,000 homes, office

KUALA LUMPUR (Jan 5): MAXBIZ CORPORATION BHD [] says the contract value of the letter of intent (LOI) of RM510 million from Fibre-N Sdn Bhd was based on the infrastructure works of RM5,100 per connection.

Maxbiz said on Thursday the LOI was for the fibre-to-the-home and fibre-to-the-office (FTTX) infrastructure works for 100,000 connections to high- rise residential and office buildings in Klang Valley, Penang and Johor Bahru.

'By way of comparison, TELEKOM MALAYSIA BHD []'s cost for the High Speed Broad Band (HSBB) project of a similar nature was stated as RM11.3 billion for 1.3 million connections, spanning over 10 years,' it said.

In its reply to a query from Bursa Malaysia Securities'' that Fibre-N had undertaken to deploy one million homes specifically in multi-tenanted buildings (high rise condominium and office buildings) over three to five years.

Fibre-N is a fibre optic cabling turnkey contractor for both in-building cabling works and roadside cable laying works. It is a wholly owned subsidiary of Open Fibre Sdn Bhd and the directors are Ranjeet Singh Sidhu and Hasniza Hashim.

Maxbiz said the overall cost of the project based on Fibre-N's current rate of RM5,100 per connection was RM510 million.

However, this included both out-plant works and in-plant works and also related scope of works such as project management, site survey works, testing & commissioning.

Kian Joo MD See Teow Chian retires

KUALA LUMPUR (Jan 5): KIAN JOO CAN FACTORY BHD []'s managing director Datuk See Teow Chuan has retired with effect from Thursday.

The company said that See, 71, ceased to be the managing director after his contract of service expired on Thursday.

However, he would remain on the board of directors as a non-independent and non-executive director.

See has a 45-year track record in the can and also carton manufacturing business. He also sits on the boards of several private limited companies.

He has a direct stake of 14.523 million Kian Joo shares.

Menang Corp sees 4.49% stake crossed at 22c each

KUALA LUMPUR (Jan 5): Property-based Menang Corporation Bhd saw 12 million shares crossed in several off-market deals on Thursday afternoon.

Stock market data showed the shares, representing a 4.49% stake, were crossed at an average price of 22 sen.

At 3.39pm, Menang was up one sen to 23 sen.

On Dec 27, Menang group deputy chairman Datin Mariam Eusoff increased her shareholding in the company with the recent acquisition of 20 million shares, or a 7.48% stake.

She bought the shares from the open market at 20 sen each on Dec 27. The recent acquisition saw her shareholding increase to 26.18% or 69.949 million shares.

MAS extends gains on fresh newsflow, turnaround hopes

KUALA LUMPUR (Jan 5): Shares of Malaysian Airline System (MAS) rose in active trade on Thursday on fresh corporate newsflow and expectations of a turnaround in its fortunes following a top management revamp.

At 4.09pm, MAS was up 17 sen to RM1.58 with 17.82 million shares done. Its call warrants MAS-CD added 4.5 sen to 16 sen while MAS-CE gained five sen to 18.5 sen.

The FBM KLCI rose 7.75 points to 1,511.97. Turnover was 1.39 billion shares valued at RM1.10 billion. There were 384 gainers, 358 loser and 326 counters unchanged.

The latest newsflow was the the Securities Commission's approval for the proposed warrants exchange exercise between MAS and AIRASIA BHD []. However, the approval is subject to the company complying with the relevant requirements pertaining to the implementation of the proposal as stipulated under the SC's equity guidelines.

Meanwhile, a news report said MAS' short-haul premium airline is set to be launched by the first half of this year. This airline would be using six B737-800 aircraft, previously used by Firefly.

Last Friday, MAS unveiled a management structure with new business units, group chief executive officer Ahmad Jauhari taking on the role as CEO of long-haul, the departure of several top officials and the entry of two aviation experts.

Bursa Securities queries Can-One over price surge

KUALA LUMPUR (Jan 5): Bursa Malaysia Securities Bhd has queried CAN-ONE BHD [] over the sharp increase''in the price of the shares recently.

At 4.41pm, Can-One was up 31 sen to RM1.37 with 6.95 million shares done.

Proton advances on chairman bid, but strategic partner crucial

KUALA LUMPUR (Jan 5): Securities of PROTON HOLDINGS BHD [] rose on Thursday, spurred by the latest corporate development where its chairman Datuk Mohd Nadzmi Mohd Salleh confirmed he had put in a bid for Khazanah Nasional's 42.7% stake.

However, CIMB Research said a strategic partnership with a global original equipment manufacturer (OEM) involving TECHNOLOGY [] transfer was needed for Proton's exports aspirations and its long-term sustainability as an auto manufacturer.

At 2.31pm, Proton was up 13 sen to RM15.01 while its call warrants also advanced in heavy trade. Proton-CL rose seven sen to 22 sen, Proton-CG five sen to 49.5 sen and Proton-CH 4.5 sen to 45 sen.

The FBM KLCI rose 2.88 points to 1,507.10. Turnover was 771.48 million shares done valued at RM599.23 million. There were 308 gainers, 311 losers and 339 counters unchanged.

A news report quoted Nadzmi as saying that privatisation was the way to go for Proton, which would enable him to restructure the whole group to turn it around.

"I know the business well, and Proton is close to my heart. There is a potential in Proton and that is why I dare to make a bid and the offer runs into billions," he was quoted saying in the report.

Nadzmi had also said if "done right", Proton's profit could easily be doubled or tripled without incurring any additional investment cost.

"It is all about how you juggle your assets. This could be done by increasing the utilisation rate of Proton's assets, cost reduction and also increasing Proton's exports. These steps could easily add a further RM500 million to RM600 million to Proton's bottom line," he was quoted saying.

CIMB Research said news of a potential management buyout is not entirely a surprise as Proton's management has, in the past, indicated such intention to do so.

'Datuk Nadzmi's belief in the privatisation for Proton and his indication that his bid runs into billions should be good news for minority shareholders banking on Proton's general offer,' it said.

The research house said'' his comment on an offer for the NTA price of Proton being too high reaffirmed its belief that a balance has to be struck as Khazanah would unlikely to settle for a price much lower than Proton's NTA but an entry price that is too high would give the acquirer less ammunition in its overhaul of the company.

'While we concur that one way to revive Proton's profitability would be to increase its plants' utilisation rate needed for the business to achieve economies of scale, we think a strategic partnership with a global OEM involving technology transfer is needed for Proton's exports aspirations and its long-term sustainability as an auto manufacturer,' it said.

Navis Cap keen to buy Hong Peng's stake in Xidelang

KUALA LUMPUR (Jan 5): XiDeLang Holdings Ltd'' (XDL) says Navis Capital has approached the former's major shareholder Hong Peng International Holdings Ltd to acquire its stake.

It said on Thursday that 'Navis Capital had indicated their intention to acquire the entire shareholdings of Hong Peng in XDL during an informal discussion'.

Trading in the shares of XDL was voluntarily suspended from 2.30pm to 3.30pm following the announcement.

According to filings to Bursa Malaysia, the British Virgin Islands' registered Hong Peng owns 240 million XDL shares or 60% as at Nov 11, 2009.

XDL share price was up one sen to 37.5 sen before trading was suspended.

KWAP to expand real estate portfolio, eyes Australia, UK

KUALA LUMPUR (Jan 5): Kumpulan Wang Persaraan (KWAP), which recently completed its acquisition of the 14-storey ASX Building in Sydney, Australia for AU$185 million, will remain active in the global real estate market, said its chief executive officer, Datuk Azian Mohd Noh.

"In 2012, we will continue to remain active in the global real estate market and grow KWAP's real estate portfolio. Besides Australia, UK is another major
property investment destination for KWAP.

"KWAP has allocated four per cent of its entire fund size or approximately RM3.2 billion for both local and international property investments and this is
KWAP's second acquisition in Australia," she said in a statement.

Elaborating on the ASX Building, Azian said it was a Grade A freehold office building located at the corner of Bridge Street and Pitt Street, Sydney's prime
financial district.

The acquisition is part of KWAP's international property investment venture, she said, adding that the property, with a net lettable area of 213,089 sq ft
was currently 85 per cent occupied.

The building's major tenant, ASX Operations Pty Ltd, part of the ASX Group which operates the Australian Securities Exchange, occupies approximately 57 per cent of the property space and the ground floor retail space is currently occupied by HSBC Bank Australia Ltd.

KWAP appointed CB Richard Ellis to undertake the property management of the asset.

This is KWAP's second property investment in Australia after acquiring 737 Bourke Street office building in Melbourne in December 2010 for AU$113.0
million. - Bernama

KLCI remains in positive territory at mid-day, but gains seen capped

KUALA LUMPUR (Jan 5): The FBM KLCI stayed above the psychologically-crucial 1,500 level at the mid-day break on Thursday, but pared down its gains as investor sentiment remains fragile.

At 12.30pm, the FBM KLCI was up 2.59 points to 1,506.81. Gainers edged losers by 306 to 300, while 334 counters traded unchanged. Volume was 754.24 million shares valued at RM579.57 million.

The ringgit weakened 0.11% to 3.1392 versus the US dollar; crude palm oil futures for the third month delivery fell RM2 per tonne to RM3,213, crude oil shed 23 cents per barrel to US$102.99 while gold gained US$4.97 to US$1,616.57.

Asian stocks steadied and reversed some earlier losses, but overall sentiment was cautious given concerns about the ability of euro zone countries to refinance their huge public debt that dampened investor risk appetite.

Meanwhile, China's services sector entered a seventh straight year of expansion in December, a survey of purchasing managers showed on Thursday, but a slowdown in the world's second-biggest economy saw overall levels of activity mired at three-month lows, according to Reuters.

The HSBC China services purchasing managers index (PMI) stood at 52.5 in December, unchanged from November, signalling a steady if sluggish expansion in the sector that is increasingly a barometer for domestic economic conditions, it said.

At the regional markets, Hong Kong's Hang Seng Index was up 0.44% to 18,810.38, Singapore's Straits Times Index added 0.58% to 2,726.76, South Korea's Kospi gained 0.39% to 1,873.49, Taiwan's Taiex was up 0.37% to 7,109.30 and the Shanghai Composite Index edged up 0.32% to 2,176.37.

Meanwhile, Japan's Nikkei 225 fell 0.65% to 8,504.44.

On Bursa Malaysia, Dutch Lady gained 60 sen to RM24.60; Timwell was up 28 sen to RM1.08, Can-One 24 sen to RM1.30, Sarawak PLANTATION []s and BHIC 22 sen each to RM2.59 and RM4.07, SOP 15 sen to RM6, while Perduren, Tahps, HLFG and Proton added 12 sen each to 85 sen, RM4.40, RM11.64 and RM5 respectively.

Decliners included Far East, YHS, Malayan Flour Mills, UMS, IJM Corp, Sime Darby, Genting and IGB, while the actives included JCY, Versatile, Proton, HWGB and Astral Supreme.

#Flash* Genting Malaysia considering US$4 bln complex in Queens, NY

KUALA LUMPUR (Jan 5): Genting Malaysia Bhd's unit is considering developing an integrated mixed-use complex, costing US$4 billion, on real property located adjacent to the Aqueduct Racetrack, Queens, New York.

It said on Thursday its indirect unit Genting New York LLC (Genting NY) had signed a non-binding letter of intent dated Jan 3, 2012 with the New York State Urban Development Corporation for the project.

'The proposed project is anticipated to cost at least US$4 billion, which will include an integrated 3.8 million square feet of convention and exhibition centre with up to 3,000 hotel rooms and an expansion of Resorts World Casino New York City,' it said in a statement to Bursa Malaysia.

Genting NY said it will work closely with New York State Urban Development Corporation, which undertaking the business as Empire State Development Corporation, and the relevant parties, to negotiate the terms.

The plan is to enter a binding memorandum of understanding on or before Nov 30, 2012.

Eversendai bids for RM12b projects worldwide

KUALA LUMPUR, Jan 5 (Bernama) -- Eversendai Corporation Bhd is bidding for RM12 billion worth of infrastructure development projects worldwide, says executive chairman cum group managing director Datuk A.K. Nathan.

He said the projects would consist of iconic infrastructure development,power plants, engineering jobs and other segments related to Eversendai's core businesses.

"The projects will be situated mainly in the Middle East, South East Asia and Commonwealth of Independent States (CIS) region," he told reporters after the signing of a memorandum of understanding between Eversendai and Sunway Business Applications here on Thursday.

He said the bidding process was on-going and Eversendai was optimistic of securing at least 20 per cent of the projects aimed given the track record of the company.

"Our success rate is usually 20 per cent and this time around we think it will be a similar figure. If it's more, I would be happy," he said.

Nathan said the company's orderbook currently stood at RM1.5 billion and he anticipated a minimum growth of 10 per cent this year.

"Every year, we have seen 10 per cent growth. Ninety-five per cent of our earnings accrue from Eversendai's overseas operations while the Malaysian
operations contributed the remaining five per cent.

"However, this year onwards we will be very busy in Malaysia. We have just completed the Manjung power plant and have kickstarted the KLIA 2 project and a project in Sabah. We expect many more to come as we have bid for many more projects here (in Malaysia).

"The projects are part of the RM12 billion projects we have already bid for. But, nothing is finalised until the contract is awarded," he said.

Nathan said in future, the Malaysian operations were poised to contribute at least 10 per cent of the company's earnings compared with the current
contribution of five per cent.

He added that Malaysia and India would become Eversendai's fastest growing markets in coming years.

"In India, we have five ongoing projects which comprises of two high-rise buildings and three power projects. "One of the projects is the RM350 million Worli Tower, which comprises a 50-storey and 80-storey buildings," he said.

Nathan said the company was also in the midst of constructing a steel fabrication plant in Trichy, India, which would boost the company's steel output
by 24,000 tonnes per annum.

"This will add to our total capacity of some 144,000 tonnes, annually," he said.

The factory, slated to be operational between six and eight months, will add to the list of four steel fabrication plants currently operating each in
Rawang, Sharjah, Qatar and Dubai. - Bernama

JAL eyes IPO of as much as US$13 bln

TOKYO (Jan 5): Japan Airlines Co plans to list its shares in an initial public offering that could raise as much as 1 trillion yen ($13 billion), Bloomberg reported on Thursday, citing two people familiar with the matter.

A JAL spokesman declined to comment. A government-backed turnaround body hired Nomura Holdings Inc and Daiwa Securities Group Inc in July as advisers on plans to re-list shares in the carrier, which filed for bankruptcy protection in January 2010.

The IPO could take place as early as September, Bloomberg said. - Reuters

Frost & Sullivan sees auto industry volume just up 1.2% to 612,000 in 2012

KUALA LUMPUR : Research firm Frost & Sullivan expects the Malaysian automotive total industry volume (TIV) to reach 612,000 units in 2012. This is a yearly growth of 1.2% from the expected figure of 605,000 units in 2011.

Frost & Sullivan head of automotive and transportation practice Kavan Mukhtyar said its 2012 forecast comes amid an uncertain global economic outlook, limited new mass market model launches and concerns of lower loan approval rates for buyers.

"Banks will be more cautious," he said at a media conference on Thursday.

He said Malaysian TIV could still see annual growth of some 5% for the next 10 years. This compares to a 15 to 20% growth rate seen in the past.

HSBC China services PMI steady, economy subdued

BEIJING (Jan 5): China's services sector entered a seventh straight year of expansion in December, a survey of purchasing managers showed on Thursday, but a slowdown in the world's second-biggest economy saw overall levels of activity mired at three-month lows.

The HSBC China services purchasing managers index (PMI) stood at 52.5 in December, unchanged from November, signalling a steady if sluggish expansion in the sector that is increasingly a barometer for domestic economic conditions.

"Unmoved on November's three-month low, the service sector PMI pointed to subdued growth momentum," Qu Hongbin, chief economist for China and co-head of Asian economic research at HSBC said in a statement accompanying the index.

That said it was the 74th straight month that the index had read above 50 -- the level that demarcates expansion from contraction -- and a level it has been above every month since the survey started in November 2005.

The steady state of the HSBC index, compiled by UK-based data provider Markit, will reinforce the views of some investors that China's economic slowdown will be modest and short-lived.

A solid rebound in the official services PMI earlier this week followed on from a gentle bounce in manufacturing activity in both official and private sector surveys.

But the sensitivity of investors to any uptick in headline economic news is arguably a function of how skewed their portfolios are towards anticipating further deterioration.

"The market is very vulnerable right now to good news," Michael Kurtz, chief Asia equity strategist at Nomura, said.

Kurtz says an anticipated softening of economic data has left regional hedge fund managers with extended short positions and mutual fund managers underweight growth-sensitive stocks and overweight cash, raising the risk of a squeeze higher for equities if data comes in any better than downbeat expectations.

"We think the markets have already priced in a lot of soft growth in the first half'" Kurtz said. "There is a risk of a perfect storm for upside surprises."

UNCERTAIN OUTLOOK

The global economic outlook may be dark -- courtesy of Europe's festering debt crisis and still anaemic consumption in the United States -- but conditions are arguably better than those in late 2008 when global financial markets were in chaos and the HSBC Service PMI sank into the low 50s.

The latest index reading of 52.5 is above levels in the first quarter of 2011 when Chinese monetary tightening was in full swing, dampening both domestic inflation and economic activity.

Sub-indexes of prices charged and outstanding business edged below 50, although both gave readings consistent with the history of the survey -- respondents appear to have an entrenched view that they have limited pricing power and insufficient work outstanding.

Business expectations fell to the lowest in the services PMI's history -- though that sub-index remains far and away the most robust element of the overall survey -- and were a clear signal to HSBC of the need for policy action to support economic growth in the months ahead.

"More headwinds are down the road due to the still weak manufacturing sector, slower jobs growth, the ongoing property correction and cooling external demand. All these factors call for more aggressive easing measures," Qu said.

Investor expectations are building that China is poised to announce a further easing of monetary conditions after a 50 basis point cut in late November to the ratio of cash banks are required to keep as reserves.

That reduction, from a record high of 21.5 percent, is estimated to have injected about 350 billion yuan ($56 billion) of credit into the economy.

Analysts expect fourth-quarter growth data from China to show a further slowdown in the rate of economic expansion, with many forecasting annual growth to have fallen below 9 percent in the last three months of the year. - Reuters