January 2, 2020 / 4:35 AM / 20 days ago

CORRECTED-China blue chips hit near 2-year high on trade optimism, policy support

(Corrects CSI300 milestone from near 11-month high to near 2-year high)

* Blue-chips add 1.4%, Shanghai shares rise 1.2% to 8-month high

* Hang Seng strongest since last July; Start-ups hit 2018 levels

* Trump to ink China deal on Jan. 15, kick off phase-2 talks

* China’s c.bank to free up more funds for bank lending Jan. 6

HONG KONG, Jan 2(Reuters) - Chinese blue chip stocks started the New Year on Thursday at their highest level in almost two years, after U.S. President Donald Trump set the date for sealing a Phase 1 trade deal with Beijing, and as the Chinese central bank signalled further policy support.

** The benchmark Shanghai Composite index was up 1.2% at 3,087.16 points - its highest level since late April 2019. The blue-chip CSI300 index drove up 1.4% to its highest since Feb. 7, 2018. ** CSI300’s financial sector sub-index rose 1.6%, the consumer staples sector fell 0.6%, the real estate index was up 1.4% and the healthcare sub-index edged down 0.4%. ** Chinese H-shares listed in Hong Kong rose 1.2% while the benchmark Hang Seng Index added 1% at 28,482.29, trading at its highest level since July 2019. ** The smaller Shenzhen index gained 1.8%, trading at April 2019 highs, while the start-up board ChiNext Composite index climbed 2% to its highest since May 2018. ** Trump said on Tuesday that Phase 1 of trade deal with China would be signed on Jan. 15 at the White House and that he would later travel to Beijing to begin talks on the next phase. ** Last week, Trump said he and Chinese President Xi Jinping would host a signing ceremony to seal the Phase 1 deal. ** China’s central bank said on Wednesday it was cutting the amount of cash that all banks must hold as reserves, effective Jan. 6, releasing around 800 billion yuan ($114.91 billion) in funds to shore up the slowing economy. ** The PBOC has now cut RRR eight times since early 2018 to free up more funds for banks to lend as economic growth slows to the weakest pace in nearly 30 years. ** “With the completion of U.S.-China interim agreement and the policy expectation of steadying growth, the market is in a phase of rising risk appetite,” analysts at Chuancai Securities wrote in a note on Thursday. ** China’s factory activity expanded at a slower pace in December but production growth was solid and business confidence shot up, a private survey showed on Thursday. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.5% while Japan’s Nikkei index was down 0.8%. ** The largest percentage gainers in the main Shanghai Composite index were Ningbo Shenglong Automotive Powertrain System Co Ltd , Zhongchang Big Data Corp Ltd and Hylink Digital Solution Co Ltd, all up by 10%. ** The Shanghai stock index is above its 50-day moving average and above its 200-day moving average.

Reporting by Noah Sin; Editing by Rashmi Aich

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