January 10, 2019 / 4:16 AM / 4 months ago

China, Hong Kong stock rise as soft inflation data raises prospect for more stimulus

* SSEC 0.2 pct, CSI300 0.4 pct, HSI 0.4 pct

* China’s soft factory-gate inflation raises prospect for more stimulus

* China says trade talks with U.S. set foundation to resolve concerns

SHANGHAI, Jan 10(Reuters) - China and Hong Kong stocks recouped earlier losses to edge higher on Thursday, as weak inflation data raised prospects for further stimulus, and as investors await more news on the U.S.-China trade talks.

** The CSI300 index rose 0.4 percent, to 3,089.94 points at the end of the morning session, while the Shanghai Composite Index gained 0.2 percent, to 2,550.08 points.

** The Hang Seng index added 0.4 percent to 26,559.48 points, while the Hong Kong China Enterprises Index gained 0.5 percent to 10,405.82 points.

** China’s producer prices in December rose at their slowest pace since September 2016 as factories confront a slowdown in demand even as Beijing steps up policy support to bolster the economy.

** “We’ve always regarded PPI as a leading indicator of China’s economic wellbeing, and as its month-on-month growth has now turned negative for the second straight month, it’s a signal worthy of vigilance,” said Betty Wang, Senior China Economist at ANZ Research.

** “If this trend persists, it may turn negative on year-on-year terms this year and more radical stimulus measures, such as benchmark interest rate cuts, may become possible.”

** China’s central bank will ratchet up support for the economy by improving its policy transmission mechanism, governor Yi Gang said in remarks published on Wednesday.

** Delegations from China and the United States ended three days of trade talks in Beijing on Wednesday in the first face-to-face negotiations since both sides agreed a 90-day truce in a trade war that has disrupted the flow of hundreds of billions of dollars of goods.

** China’s commerce ministry said on Thursday that the talks with the United States this week were extensive, and helped establish a foundation for the resolution of each others’ concerns.

** However, there were few concrete details on the meetings in Beijing, which were not at a ministerial level, and so were not expected to produce a deal to end the trade war.

** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.35 percent while Japan’s Nikkei index was down 1.17 percent.

** The yuan was quoted at 6.786 per U.S. dollar, 0.46 percent firmer than the previous close of 6.8175.

** The largest percentage gainers in the main Shanghai Composite index were Lanzhou LS Heavy Equipment Co Ltd , up 10.1 percent, followed by XiAn Typical Industries Co Ltd, gaining 10.1 percent and Jiangsu Sunshine Co Ltd, up by 10.09 percent.

** The largest percentage losses in the Shanghai index were Pengqi Technology Development Co Ltd, down 9.92 percent, followed by Zhongchang Big Data Corp Ltd, losing 8.42 percent and Pengqi Technology Development Co Ltd , down by 7.02 percent.

** So far this year, the Shanghai stock index is up 2.02 percent, while China’s H-share index is up 2.3 percent. Shanghai stocks have risen 2.02 percent this month.

** The top gainers among H-shares were CSPC Pharmaceutical Group Ltd, up 7.57 percent, followed by Guangzhou Automobile Group Co Ltd, gaining 5.34 percent and Great Wall Motor Co Ltd, up by 4.03 percent.

** The three biggest H-shares percentage decliners were New China Life Insurance Co Ltd, which has fallen 1.61 percent, Postal Savings Bank of China Co Ltd, which has lost 1.4 percent and China Tower Corp Ltd, down by 1.3 percent.

** About 9.48 billion shares have traded so far on the Shanghai exchange, roughly 69.9 percent of the market’s 30-day moving average of 13.57 billion shares a day. The volume traded was 19.19 billion as of the last full trading day.

** As of 04:01 GMT, China’s A-shares were trading at a premium of 17.71 percent over the Hong Kong-listed H-shares.

Reporting by Luoyan Liu and John Ruwitch; Editing by Sunil Nair

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