May 31, 2018 / 4:20 AM / a year ago

China, Hong Kong stocks rally on forecast-beating data

* SSEC 1.4 pct, CSI300 1.6 pct, HSI 0.8 pct

* HK->Shanghai Connect daily quota used 4.5 pct

* Shanghai->HK daily quota used 0.2 pct

* FTSE China A50 +1.9 pct, BNY Mellon ADR China Select Index -0.6 pct

SHANGHAI, May 31 (Reuters) - China and Hong Kong stocks rebounded on Thursday, as strong data eased concerns about an economic slowdown amid trade tensions, and as Italy worries cooled, while MSCI’s inclusion of Chinese shares in its global indexes from Friday also boosted sentiment. ** The CSI300 index rose 1.6 percent to 3,781.64 at the end of the morning session, while the Shanghai Composite Index gained 1.4 percent to 3,083.49. ** The Hang Seng index added 0.8 percent to 30,282.91, while the Hong Kong China Enterprises Index gained 1.1 percent to 11,892.71. ** On the mainland, gains were led by consumer shares , with industry bellwether Inner Mongolia Yili Industrial leaping 8.7 percent by the lunchbreak. ** China’s vast manufacturing sector grew at the fastest pace in eight months in May, blowing past expectations and easing concerns about an economic slowdown even as risks from trade tensions with the United States and a crackdown on debt point to a bumpy ride ahead. ** On the whole, however, economists were sceptical of the sustainability of industrial sector strength, suggesting the broader economy will face pressure over coming months. **”We doubt this strength will be sustained for long given that it appears to mostly reflect a temporary boost to industrial output from the easing of pollution controls rather than a turnaround in underlying demand,” said Julian Evans-Pritchard, Senior China Economist at Capital Economics, in a note after the data release. ** The International Monetary Fund kept its forecast for China’s 2018 economic growth unchanged at 6.6 percent on Wednesday, but warned that overly rapid credit growth and trade frictions could pose risks for the world’s second-largest economy. ** Sentiment was also lifted as political turmoil in Italy showed signs of easing. ** A degree of calm returned, with Italy’s two anti-establishment parties renewing efforts to form a coalition government rather than force Italy into holding elections for the second time this year. ** Italy’s successful auction of five- and 10-year government bonds also assuaged concerns about its ability to finance itself after turbulence in its debt market resulted in the biggest one-day surge for two-year yields in 26 years. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.71 percent while Japan’s Nikkei index was up 0.77 percent. ** The yuan was quoted at 6.4064 per U.S. dollar, 0.24 percent firmer than the previous close of 6.4218. ** Top percentage gainers in the main Shanghai Composite index were Shanghai Hugong Electric Group Co Ltd up 10.02 percent, followed by Sobute New Materials Co Ltd gaining 10.02 percent and Comefly Outdoor Co Ltd up by 10.01 percent. ** Top percentage losers in the Shanghai index were Ginwa Enterprise Group Inc down 10.04 percent, followed by Junhe Pumps Holding Co Ltd losing 9.99 percent and Cinda Real Estate Co Ltd down by 7.11 percent. ** The top gainers among H-shares were China Petroleum & Chemical Corp up 4.7 percent, followed by Anhui Conch Cement Co Ltd gaining 3.62 percent and PetroChina Co Ltd up by 2.87 percent. ** The three biggest H-shares percentage decliners were Postal Savings Bank of China Co Ltd which has fallen 1.32 percent, China Vanke Co Ltd which has lost 1.1 percent and Hengan International Group Company Ltd down by 0.5 percent. ** As of 04:00 GMT, China’s A-shares were trading at a premium of 19.72 percent over the Hong Kong-listed H-shares

Reporting by Luoyan Liu and John Ruwitch; Editing by Gopakumar Warrier

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