China stocks rise, led by commodity shares as dollar weakens; financials lift HK

* SSEC up 0.3 pct, CSI300 gains 0.4 pct, HSI up 0.9 pct

* Commodity shares jump, yuan strengthens as dollar weakens

* HK bets on supportive policies ahead of handover

SHANGHAI, June 29 (Reuters) – China stocks firmed on
Thursday, aided by a jump in raw material shares as a weaker
dollar triggered a rally in commodity prices.

Sentiment was also boosted by easing fears of a quarter-end
liquidity crunch in the banking system, as well as a rise in the
yuan, which reduced concers about capital outflows.

Hong Kong shares also rose on bets that the Chinese
government would unveil supportive policies as President Xi
Jinping visits the former British colony to commemorate the 20th
anniversary of Hong Kong’s handover to China on July 1.

China’s blue-chip CSI300 index was up 0.4 percent
at 3,659.65 points by the midday break, while the Shanghai
Composite Index had gained 0.3 percent, to 3,183.21

The raw material sector firmed 0.9 percent as
global commodity prices rose on the back of a weaker U.S.

Aluminium Corp rose about 2 percent, China
Molybdenum increased more than 3 precent and copper
maker Jiangxi Copper firmed 1 percent.

“The weaker dollar benefited China’s commodity-related
stocks in an indirect way,” said Chen Yong, analyst at Lianxun

“Besides, a strengthening yuan eases capital outflow fears.”

Reflecting the dollar’s broad weakness, China’s yuan rose
against the dollar on Thursday to its highest level in seven
and-a-half months.

Receding fears of capital outflows from China added to
relief that China’s banking system does not appear to be
suffering from a cash shortage at the end of the second quarter,
as some had feared.

Citing “relatively high” liquidity, China’s central bank
skipped open market operations for the fifth day in a row on

Shares in China’s coal miners were particularly
strong, as the country said it will ban coal imports at small
ports from July 1, boosting China’s coking coal futures.

Shanxi Coking surged the maximum allowed 10
percent, while Shanxi Xishan Coal and Electricity Power
jumped nearly 5 percent.


Hong Kong stocks also strengthened. The Hang Seng index
increased 0.9 percent to 25,910.58 points, while the Hong
Kong China Enterprises Index gained 0.2 percent to

Financial shares rose sharply on expectations that
China will announce more measures to link its markets with Hong
Kong’s benefiting investment banks and brokerages.

Index heavyweight HSBC rose more than 4 percent,
as Morgan Stanley upgraded the stock to “overweight” from “equal

The second board, which has dropped sharply this
week as investors dumped penny stocks, slipped a modest 0.37
percent, although that is enough to set it up for a record low

(Reporting by Samuel Shen and David Stanway)

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