* SSEC flat, CSI300 -0.1 pct, HSI 0.4 pct
* A possible U.S. rate hike this month could hurt China
* China's metal stocks gain as gov't orders output slash
SHANGHAI, March 2 China stocks were steady on
Thursday morning, as demand was hit by a possible U.S. interest
rate hike later this month and concerns liquidity could tighten
as Beijing's steps up its fight against leverage.
But Hong Kong shares rebounded, joining the regional rally,
after Wall Street powered to record highs as investors cheered
President Donald Trumps' measured tone in his first speech to
China's CSI300 index dipped 0.1 percent, to
3,454.42 points by the lunch break, while the Shanghai Composite
Index was unchanged at 3,248.02 points.
CSI300, the blue-chip index, has climbed roughly 20 percent
over the past year on signs of economic recovery, supported by
Beijing's fiscal stimulus and efforts to shut down "zombie"
But the rally has tapered off in over the last few months,
suggesting further gains could be limited.
"The recent rangebound trading pattern reflects surging
market divergence over the market's direction," said Yang Hai,
strategist at Haiyuan Securities.
If the U.S. raises rates again this month, it could trigger
fresh capital outflows and hurt domestic liquidity, which is
already under pressure from Beijing's "deleveraging" campaign,
Indeed, Guo Shuqing, China's newly-appointed banking
regulator said on Thursday that risk prevention in the sector
will be a more prominent policy focus in 2017, signalling
tougher crackdown in areas such as shadow banking.
Most sectors fell, but metal shares bucked the
trend, rising 0.8 percent, on news that China has ordered steel
and aluminium producers in 28 cities to slash output during
winter as Beijing intensifies its war on smog.
In Hong Kong, the Hang Seng index added 0.4 percent,
to 23,862.31 points, while the Hong Kong China Enterprises Index
gained 0.5 percent, to 10,339.10.
Overnight on Wall Street, the Dow Jones Industrial Average
blasted through the 21,000-point mark for the first time,
as investors embraced Trump's less protectionist tone in his
(Samuel Shen and John Ruwitch; Editing by Shri Navaratnam)