* SSEC +0.1 pct, CSI300 -0.1 pct, HSI -0.1 pct
* China's share sales rules may have unintended consequences
* China property shares jump on performance expectations
SHANGHAI, May 31 China stocks opened sharply up
on Wednesday in response to regulators' move to restrict "bulk
selling", but by midday the main indexes surrendered all the
gains, underscoring fragile investor confidence and fears the
government's heavy-handed intervention could backfire.
Most sectors fell, with sentiment barely aided by a survey
showing China's manufacturing sector grew faster than expected
Not long after the markets reopened following the Dragon
Boat Festival holiday, both the blue-chip CSI300 index
and the Shanghai Composite Index jumped over 1 percent,
but they ended the morning roughly flat, at 3,476.07 points and
3,112.11 points, respectively.
The initial euphoria - triggered by government rules
published over the weekend to restrict "intensive" and "viscous"
selling by shareholders - quickly evaporated as investors
contemplated the rules' side effects.
Regulators' intention is to prevent massive selling of
shares and stabilize the market, but for those shareholders who
had no intention to sell, the rules "would prod them to sell
sooner, for fear sales restrictions would only become tougher in
future," said Wang Yu, strategist a Pacific Securities.
"The market performance also reflects weak sentiment."
Echoing Wang's view, UBS strategist Gao Ting wrote:
"The new regulations could be easily interpreted as
stabilizing the market in the short term ... However, we don't
think this is a decisive factor that could determine
medium-range movements in the stock market."
Investors largely looked past the official Purchasing
Managers' Index (PMI) survey that added to broader signs that
downward pressure on China's growth has eased lately.
Economists, however, generally agree momentum in the world's
second-largest economy will slow over the year as authorities
crack down on debt risks and credit gets squeezed.
Most sectors fell, but the real estate sector
jumped over 2 percent by midday, encouraged by stellar gains of
Hong Kong-listed property shares recently, as well as
expectations of forecast-beating performance by listed
Hong Kong market was roughly flat by the lunch break.
The Hang Seng index dropped 0.1 percent, to 25,680.59
points, while the Hong Kong China Enterprises Index was
unchanged at 10,619.81.
(Reporting by Luoyan Liu and John Ruwitch; Editing by Shri