* Hang Seng higher by 0.4%, H-shares add 0.1%
* Protests cool as HK leader U-turns on controversial law
* Trading volume lowest since May 27; FOMC meet this week
HONG KONG, June 17 (Reuters) - The Hong Kong stock market closed higher on Monday as local officials suspended efforts to push for a controversial law, de-escalating mass protests, but trading was muted ahead of the U.S. Federal Reserve meeting this week.
** At the close of trade, the Hang Seng index was up 0.4% at 27,227.16 points. The Hang Seng China Enterprises index ended nearly 0.1% higher. ** The sub-index of the Hang Seng tracking energy shares ended up 0.7%, while the IT sector closed 0.3% lower, the financial sector ended 0.7% higher and property sector ended 0.3% higher. ** Masses of protesters in the city took to the streets for a second Sunday against the controversial extradition bill. Hong Kong’s leader Carrie Lam has apologised and suspended the push for the law. ** “The extradition law created some social tension last week, that’s now been eased with (the bill’s) suspension,” said Ben Kwong, head of research, KGI Asia. “The market’s focus now turns back to economic issues, such as central bank meetings this week.” ** The Fed’s policy-setting Federal Open Market Committee will convene on June 18 and 19. As of Monday, the market is almost pricing in a 25 basis point cut by July, and expect another cut of the same size by October. ** Trading was subdued ahead of the Fed meeting. About 1.53 billion Hang Seng index shares were traded, lowest since May 27. Volume in the previous trading session was 2.09 billion. ** Hong Kong’s currency is pegged to the greenback and local official interest rates move lockstep with U.S. ones. ** Most tenors of interbank lending rates, which spiked during last week’s protests, fell on Monday. ** The top gainer on the Hang Seng was Wharf Real Estate Investment Co Ltd, which gained almost 3%, while the biggest loser was Country Garden Holdings Co Ltd, which dropped 2.1%. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.3%, while Japan’s Nikkei index closed pretty much flat. ** At close, China’s A-shares were trading at a premium of 27.13% over Hong Kong-listed H-shares.
Reporting by Noah Sin, Editing by Sherry Jacob-Phillips