* CSI300 -3.14%, the biggest drop since July 2020
* A stricter stance to be formalized in the coming months – analysts
* Consumer companies measure, brewers follow losses
SHANGHAI, Feb 22 (Reuters) – China’s blue-chip index posted its biggest daily fall in nearly seven months on Monday after hitting higher levels last week , while investors complained about high stock valuations and the risk of policy tightening. ** China left its benchmark lending rate for corporate and housing loans unchanged for the 10th straight month on Saturday, but profitability has been rising that authorities may begin to take a tighter policy stance. ** “Financial conditions have tightened in practice since the beginning of the year. We expect the PBOC to formalize the move with an increase in policy levels in the coming months, ”said analysts at Capital Economics. ** China’s CSI300 blue-chip index fell 3.14% to close at 5,597.33 points, its biggest daily percentage fall since July 24, 2020. ** Shanghai Composite index fell 1.45% to 3,642.44 points. ** Alcohol shares fell, with Kweichow Moutai Co. Ltd’s heavyweight falling 7% as foreign investors sold shares through the Stock Link. ** Consumer staple share fell 5.96%, the healthcare sub-index fell 5.15% and the finance sub-index lost 1.75%. ** Trading activity increased, with 48.88 billion shares trading on the Shanghai exchange, about 153.9% of the 30-day moving average market of 31.77 billion shares per day. ** Shenzhen index finished down 2.08% and starting table ChiNext Composite index fell 4.47%. ** At 07:11 GMT, the yuan traded at 6.4631 per US dollar, 0.05% weaker than the previous close of 6.4598. ** Despite Monday’s decline, valuations are still near high levels and some analysts expect strong earnings to remain above a circle. ** “We could see a sharper shift into cycling stocks such as banks, commodities and energy, with technical shares still strong after very strong performance (so far),” said Carlos Casanova, senior economist for Asia at Union Bancaire Privee. (Reporting by Andrew Galbraith; Editing by Vinay Dwivedi)