SHANGHAI: China stocks are poised to end the week lower with shares on Friday dipping slightly on signs an economic recovery could be losing steam, but some traders suspect the government is intervening to limit losses.

The blue-chip CSI300 index fell 0.5 per cent, to 3,498.16 points by the lunch break, and was down 0.8 percent for the week.

The Shanghai Composite Index lost 0.4 per cent to 3,261.64 points.

A slew of data published this week, including inflation and trade, have led investors to question the sustainability of the economic recovery.

Data showed China's production price inflation starting to peak, CPI weaker-than-expected, property sales growth down sharply, and car sales growth turning negative.

"These are definite signs that the reflation trade is fading," said Hong Hao, head of research at BOCOM International.

He added that the market had not fully priced in these changes to the world's second largest economy, partly because of suspected government intervention.

For example, regulators on Wednesday suspended trading in a brokerage account that contributed to the flash crash in shares of Ping An Insurance Group Co of China Ltd and Industrial Bank Co Ltd.

Meanwhile, last-minute buying was seen in other index-heavy weights, such as PetroChina Co Ltd and Sinopec Corp .

"The attention from the 'visible hand' is bewildering, and may be preventing stocks from pricing in the waning momentum in China's economic rehabilitation," Hong said, referring to the government's intervention.

By Friday lunch time, most sectors in China were in negative territories, with real estate and transport shares leading the decline.

Reflecting renewed preference in defensive stocks as cyclical shares corrected, Chinese spirit maker Kweichow Moutai Co hit record highs.

The Hong Kong stock market is suspended from trading on Friday and Monday due to public holidays. -- REUTERS