* SSEC 0.6%, CSI300 0.5%, HSI -0.7%
* HK->Shanghai Connect daily quota used 2.5%, Shanghai->HK daily quota used 3%
* FTSE China A50 +0.1%
SHANGHAI, Jan 6 (Reuters) - China stocks started the week higher on Monday, aided by strong gains for the country’s oil producers as oil prices extended gains on escalating Middle East tensions.
** The CSI300 index rose 0.5% to 4,165.50 at the end of the morning session, while the Shanghai Composite Index gained 0.6% to 3,101.98, its highest since April 29.
** Iraq’s parliament called on Sunday for U.S. and other foreign troops to leave as a backlash grows against the U.S. killing of a top Iranian general, and President Donald Trump doubled down on threats to target Iranian cultural sites if Tehran retaliates.
** For the short term, equities on the mainland and Hong Kong could be under pressure from the rising Middle East tensions, though the extent of any correction would be difficult to “break” a recovery in the markets for the first quarter of 2019, Zhang Chi, an analyst with Western Securities, said in report.
** The correction pressure would be higher in Hong Kong than in the A-share market, given the former’ s stronger linkage with the U.S. stock market, Zhang added.
** China’s Banking and Insurance Regulatory Commission said in a document published on Friday that it would promote the conversion of household savings into long-term funds in the capital markets. Analysts say the move would bode well for the country’s capital market for the long run.
** For the day, the A-shares got a strong boost from a rally in energy giants as oil gains on rising Mideast tensions, with index heavyweight PetroChina surging as much as 5.5%.
** The CSI300 energy index gained 2.7% to a six-month high, while the Hang Seng energy sub-index added 2.5%.
** China’s services sector expanded at a slower pace in December following a strong rebound in the previous month, with business confidence falling to the second lowest on record despite a pick-up in new orders, a private survey showed on Monday.
** On the trade front, the South China Morning Post reported on Sunday a Chinese trade delegation plans to travel to Washington on Jan. 13 for the signing of the U.S.-China Phase 1 trade deal.
** In Hong Kong, stocks tracked weakness in other Asian markets.
** The Hang Seng index dropped 0.7%, to 28,261.56, while the Hong Kong China Enterprises Index lost 0.3%, to 11,219.83.
** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.74% while Japan’s Nikkei index was down 1.97%.
** The yuan was quoted at 6.9722 per U.S. dollar, 0.1% weaker than the previous close of 6.965.
** As of 0403 GMT, China’s A-shares were trading at a premium of 27.62% over the Hong Kong-listed H-shares. (Reporting by Luoyan Liu and Brenda Goh; Editing by Rashmi Aich)