* SSEC +0.3 pct, CSI300 +0.4 pct, HSI +0.8 pct
* China producer price gains slow further
* Hong Kong shares extend gains, Tencent at fresh record
SHANGHAI, May 10 Chinese stock markets rose on
Wednesday morning, as strong gains in small-caps offset soft
data showing the country's April producer price inflation cooled
more than expected.
The CSI300 index rose 0.4 percent, to 3,366.66
points at the end of the morning session, while the Shanghai
Composite Index gained 0.3 percent, to 3,088.63 points.
China's factory gate prices cooled more than expected in
April, in a sign manufacturing activity may be losing momentum
along with other sectors of the economy as domestic demand
remains muted and the government cracks down on financial risks.
The soft data, combined with slightly slower growth in
manufacturing activity, reinforces analysts' views that China's
economic expansion remains solid but is starting to moderate
after a surprisingly strong start to the year.
China's reflation cycle in producer prices has probably
peaked, and will trend down further, which could drag on
economic growth in the second half of the year, said Betty Wang,
senior China economist for ANZ in Hong Kong.
"Deleveraging remains the policy focus, regardless of the
PPI or CPI trend. We don't think PPI or CPI will have any
significant impact on the current policy direction," said Wang.
The People's Bank of China injected 47.6 billion yuan ($6.9
billion) through its pledged supplementary lending (PSL)
facility on Wednesday, after skipping open market operations for
a third straight trading day on Tuesday.
However, worries over policy tightening lingered, as the
official Xinhua News Agency published editorials for the seventh
day in a row that highlighted Beijing's concerted campaign to
guard against financial risks, stoking concerns deleveraging
efforts and financial regulations would not loosen.
Small-caps, in particular newly-listed stocks, bounced
sharply, after a recent violent sell-off amid worries over
tighter liquidity and expectations of more equity supply.
An index tracking small- and medium-sized companies
gained 0.4 percent.
Sector performance was mixed, with gains led by financial
Hong Kong stocks extended gains to stand at a near 22-month
peak, lifted by heavyweight Tencent Holdings, which
rose 1.4 percent to a fresh record high.
Sentiment was also aided by signs of stabilisation in China
stocks after sharp falls recently, with Shanghai shares
steadying for the second session after a five-day losing streak.
The Hang Seng index added 0.8 percent, to 25,088.27
The Hong Kong China Enterprises Index gained 1.6
percent, to 10,290.35.
($1 = 6.9059 Chinese yuan)
(Reporting by Luoyan Liu and John Ruwitch; Editing by