UPDATE 2-China's Xi cited in state media as health rumours fly
* Vice-president Xi Jinping quoted in condolence note
* Experts doubt he is suffering from more than minor ailment
* Uncertainty has had no impact on Chinese, foreign markets
By Michael Martina
BEIJING, Sept 13 (Reuters) - China has issued the first comments attributed to president-in-waiting Xi Jinping since his disappearance from the public eye over 10 days ago ignited rumours over his health, but there was no public sighting or new photograph of him.
Xi, who has skipped meetings with visiting foreign leaders over the past week, was cited by state media late on Wednesday night as expressing condolences to the family of a veteran Communist Party official who died last week.
Beijing has still not issued a statement directly responding to the rumours over the 59-year-old's health, which have included a bad back, heart trouble, a stroke and a sinister ca r -crash injury.
China experts doubt Xi is suffering more than a minor ailment - a version supported by sources close to the leadership - but Beijing's refusal to clarify the situation has begun to emerge as a talking point in global financial markets.
"Xi Jinping has been a big worry for people. He's been out of the public eye for about a week now ...," Francis Cheung, head of China and Hong Kong strategy with investment group CLSA, said on the sidelines of a conference in Hong Kong.
Another chief strategist, with a U.S. securities firm in Tokyo, added that Beijing's silence - though in keeping with a tradition of not discussing the health of senior leaders - could indicate some discord behind the scenes.
"I assume this whole incident reflects some behind-the-scenes frictions in formulating policies under the new leadership," the strategist said, speaking on condition of anonymity because of the sensitivity of the topic.
The uncertainty has had no impact so far on Chinese or foreign markets, absorbed by Europe's debt crisis and China's own economic slowdown, but investors are now keeping a close eye on Xi in a year already notable for high political drama.
Senior leader Bo Xilai was suspended from the Politburo earlier this year and his wife convicted of the murder of a British businessman. Blind human rights activist Chen Guangcheng escaped from house arrest in May and took refuge in the U.S. embassy before leaving for New York.
In another scandal this month, a senior ally of President Hu Jintao was demoted after sources said the ally's son was involved in a deadly crash with a luxury sports car.
Xi, expected to be named as the party's new boss next month and take up the reins as president in March, was last known to have appeared in public on Sept. 1. But speculation took off last week when he skipped meetings with U.S. Secretary of State Hillary Clinton and Singapore's prime minister.
This week, a pre-arranged photo opportunity between Xi and the Danish prime minister never happened.
Some sources have said Xi suffered a back injury while swimming, though they gave no more details.
China has yet to formally announce a date for the party congress at which Xi will be anointed, though it is still widely expected to be held in Beijing next month.
"It is in fact quite concerning that they still haven't announced a date of the congress and it's very, very close now," one China-based European diplomat told Reuters on customary condition of anonymity.
He said it was understood that hotels around Beijing had made bookings related to the congress for the third week of October.
The China News service, in a report posted on its website late on Wednesday, said Xi and other top Chinese leaders had offered their sympathies to the family of Huang Rong, a retired official from southern Guangxi region who died on Sept. 6 - the day after Xi missed his meeting with Clinton.
Senior officials including President Hu Jintao and Xi, "expressed their grief and heartfelt sympathies through various means to the relatives of Huang Rong", the China News service said. It did not directly quote Xi.
Asked again about Xi's whereabouts at a daily news briefing on Thursday, Foreign Ministry spokesman Hong Lei declined to comment, saying: "I have already answered this question many times".
China's Internet users have spread rumours about Xi as Beijing prepares for the 18th Communist Party Congress to usher in a once-in-a-decade transition to a new top leadership team headed by Xi.
Experts say the official silence on Xi's situation in face of wild rumours shows that Beijing has yet to come to terms with its position as the world's second-largest economy and an emerging superpower.
"It is truly a thing of wonderment that we can speculate the way we are about the leadership of the world's second most powerful country," David Finkelstein, director of China studies at CNA, a U.S. think tank, said at a forum in Washington.
"People are paying attention to what goes on in domestic Chinese politics, just like they watch the U.S. election."
Douglas Paal, of the Carnegie Endowment for International Peace, said the secrecy was a function of one-party rule.
"The Chinese people don't get a big vote in the 18th Party Congress, and the people who do probably all know exactly where he is and what he's doing," he told the same event.
Xiao Minjie, an independent economist based in Tokyo, told Reuters he would wait to see if Xi made an appearance at celebrations marking China's national day on Oct. 1 before reading into his hiatus from the spotlight.
"Judging from the fact that other top Chinese officials are acting normally, it may just be his health problem and not a sign of something extraordinary happening," he said.
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