August 27, 2018 / 5:38 AM / a month ago

China stocks at highest in two weeks as c.bank seeks to stabilize yuan

* SSEC +1.4 pct, CSI300 +1.9 pct, HSI +2.1 pct

* China cenbank revives “counter-cyclical factor” for yuan fixing

* Airline shares rally on stronger yuan

SHANGHAI, Aug 27 (Reuters) - Shares in China reached their highest levels in two weeks on Monday, buoyed by a stronger yuan after the central bank moved to keep the currency market stable, boosting airline stocks and other firms with heavy dollar exposure.

The Shanghai Composite index was up 1.7 percent to 2,776.08 in early afternoon trade.

China’s blue-chip CSI300 index was up 2.2 percent, while the financial sector sub-index rose 1.3 percent. The consumer staples sector gained 3.3 percent, while the real estate index was up 3.3 percent and healthcare sub-index rose 3.9 percent.

Chinese H-shares listed in Hong Kong rose 2.5 percent at 11,071.01, while the Hang Seng Index was up 2 percent at 28,222.35.

The yuan hovered at a 2-1/2-week high against the U.S. dollar on Monday after China’s central bank revived a “counter-cyclical factor” in its daily fixing to support the currency, arresting a record 10-week slide that has rattled global markets.

The yuan was quoted at 6.8143 per U.S. dollar, 47 pips firmer than the previous close of 6.819.

Airline shares were among the winners on Monday as investors bet that a stronger yuan would boost their bottom lines. China Southern Airlines gained 4.5 percent and Air China was up 3.8 percent.

The smaller Shenzhen index rose 2.3 percent and the start-up board ChiNext Composite index was higher by 2.9 percent.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.1 percent while Japan’s Nikkei index was up 1 percent.

Shares around the region were supported by Federal Reserve Chair Jerome Powell’s comments on Friday that a gradual approach to raising rates was best to protect the U.S. economy and job growth.

At midday, the largest percentage gainers on the main Shanghai Composite index included CIG ShangHai Co Ltd , up 10.02 percent, followed by Olympic Circuit Technology Co Ltd, rising 10.02 percent, and SEC Electric Machinery Co Ltd with a 10 percent gain.

Shanghai’s largest percentage losses were Gansu Gangtai Holding Group Co Ltd, down 10.07 percent, followed by Xingjiang Korla Pear Co Ltd, off 9.96 percent, and Anxin Trust Co Ltd down by 7.36 percent.

The Shanghai index is down 17.47 percent so far this year, while China’s H-share index is off by 7.9 percent. Shanghai stocks have declined 5.11 percent this month.

The top gainers among H-shares at midday included Guangzhou Automobile Group Co Ltd, up 7.35 percent, followed by Dongfeng Motor Group Co Ltd, gaining 5.46 percent, and China Resources Land Ltd, up by 4.99 percent.

Declining H-shares were led by China Shenhua Energy Co Ltd , down 0.47 percent, Guangdong Investment Ltd , off 0.4 percent, and ZhongAn Online P & C Insurance Co Ltd, down by 0.1 percent.

Some 6.96 billion shares have traded so far on the Shanghai exchange on Monday, roughly 52.1 percent of the market’s 30-day moving average of 13.35 billion shares a day. The volume traded on the last full trading day was 10.05 billion shares.

As of 04:51 GMT, China’s A-shares were trading at a premium of 16.81 percent over Hong Kong-listed H-shares.

In Hong Kong, the sub-index of the Hang Seng index tracking energy shares rose 2.7 percent while the IT sector was up 1.7 percent.

The top gainer on the Hang Seng was Sunny Optical Technology Group Co Ltd, up 6.68 percent, while China Shenhua Energy Co Ltd led declines with a loss of 0.47 percent.

Reporting by Andrew Galbraith Editing by Darren Schuettler

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