October 8, 2019 / 4:56 AM / 14 days ago

China, Hong Kong stocks rise on stimulus hopes; trade talks in focus

* SSEC +0.8%, CSI300 +1.1%, HSI +0.7%

* China services sector growth falls to 7-month low - Caixin PMI

* U.S.-China trade deal hopes dim as talks get underway in tense atmosphere

SHANGHAI, Oct 8(Reuters) - China stocks rose on Tuesday as markets re-opened after a week-long holiday, with a dim services sector survey reinforcing hopes Beijing will roll out more stimulus measures.

** Traders, though, turned cautious about trade talks following U.S. President Donald Trump’s remarks.

** The CSI300 index rose 1.1%, to 3,857.23, by the end of the morning session, and the Shanghai Composite Index gained 0.8%, to 2,929.53.

** The Hang Seng index added 0.7%, to 25,992.76, while the Hong Kong China Enterprises Index gained 1.0%, to 10,246.76.

** China’s services sector grew at its slowest pace in seven months in September despite a strong increase in new orders, as operating expenses continued to rise at the end of the third quarter, a private survey showed.

** Services account for more than half of China’s economy, providing a key buffer as persistent trade tensions with the United States weigh heavily on the country’s manufacturing sector.

** “We continue to be optimistic about the A-share market in the fourth quarter, as there is still room for policy boost which would further lift risk appetite,” Orient Securities said in a report.

** Also, certainty has gradually increased that corporate earnings are expected to bottom out in the third quarter, which could provide fundamental support to stocks, the brokerage added.

** Robust consumer spending during the “Golden Week” also helped boost sentiment, sending consumer shares higher.

** Spending on retail goods and dining during the week-long National Day holidays returned to growth this year, offering unexpected respite to an economy that has been expanding at its weakest pace in almost three decades.

** The CSI300 consumer staples index rose 2% by the lunch break, leading gains among major sectors.

** Focus is also on the developments in Sino-U.S. trade talks.

** Prospects for progress in U.S.-China trade talks dimmed on Monday after Washington blacklisted Chinese companies over Beijing’s treatment of predominantly Muslim ethnic minorities, and President Donald Trump said a quick trade deal was unlikely.

** Trump and his top economic adviser, Larry Kudlow, spoke in generally upbeat terms about this week’s discussions with China, the first such high-level talks in more than two months, but Trump insisted he would not be satisfied with a partial deal.

** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.62%, while Japan’s Nikkei index was up 1.02%.

** The yuan was quoted at 7.126 per U.S. dollar, 0.31% firmer than the previous close of 7.148.

** The largest percentage gainers in the main Shanghai Composite index were Hunan Fangsheng Pharmaceutical Co Ltd , up 10.03%, followed by Nanjing Huamai Technology Co Ltd, gaining 10.01%, and Zhejiang Jinghua Laser Technology Co Ltd, up by 10.01%.

** The biggest percentage losers in the Shanghai index were Shanghai Film Co Ltd, down 10.01%, followed by Shanghai DZH Ltd, losing 9.98%, and COSCO Shipping Energy Transportation Co Ltd, down by 9.97%.

** The top gainers among H-shares were CSPC Pharmaceutical Group Ltd, up 5.38%, followed by ANTA Sports Products Ltd, gaining 3.25%, and Geely Automobile Holdings Ltd , up by 2.73%.

** The three biggest H-shares percentage decliners were Hengan International Group Company Ltd, which has fallen 0.79%, CRRC Corp Ltd, which has lost 0.7%, and ENN Energy Holdings Ltd, down by 0.7%.

** As of 04:17 GMT, China’s A-shares were trading at a premium of 29.74% over the Hong Kong-listed H-shares.

Reporting by Luoyan Liu and John Ruwitch; Editing by Subhranshu Sahu

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