China shares inch up, outperform Asia; Hong Kong lower
(updates to midday)
* HSI down 0.2 pct, tracks weakness in rest of Asia
* CSI300, Shanghai Comp up 0.1 pct
* Reports of China govt funds, insurers buying shares support
* ZTE recovers after brokers recommend buying on weakness
* China auto stocks rise on rural subsidy report
By Vikram Subhedar
HONG KONG, Oct 10 (Reuters) - China shares outperformed Asian peers and inched higher on Wednesday led by brokers and oil producers for a second straight day on hopes that Beijing will take more market-boosting steps.
The Hang Seng index, however, ended the morning session down 0.2 percent, dragged lower by a weak close overnight on Wall Street due to worries over corporate earnings. The main index of Chinese shares listed in Hong Kong rose 0.5 percent.
On the mainland, the CSI300 index of top Shanghai and Shenzhen listings and the Shanghai Composite both rose 0.1 percent.
China's major insurance companies increased their combined stock holdings by more than 10 billion yuan ($1.6 billion) over the last three trading days and will continue buying equities, the official Shanghai Securities News said on Wednesday.
The report comes after Chinese banking shares rallied in the previous session on expectations that Central Huijin, a unit of China's sovereign wealth fund, would continue to increase its stake in banks.
The Shanghai Securities said that Huijin had added 18.8 million shares of Bank of China Ltd in the third-quarter.
Bank of China shares in Hong Kong rose 0.3 percent while Industrial and Commercial Bank of China Ltd rose 0.9 percent.
"Today's theme is more government support," said a Hong Kong-based trader at an Asian brokerage adding that a report on subsidies for vehicle sales in rural areas was supporting auto stocks.
Dongfeng Motor Group Co Ltd rose 3.6 percent while Shenzhen-listed FAW Car Co Ltd rose 4.4 percent.
Chinese automakers are also expected to have gained some market-share last month after sales of Japanese car makers tumbled in September due to a territorial row between the two countries.
Analysts at Deutsche Bank cut their earnings estimates for Dongfeng, which has joint ventures with Japan's Nissan Motor Co and Honda Motor Co in China, but still rated the stock a "buy" on valuation.
Shares of ZTE Corp, the target of a U.S. congressional report that urged American companies to stop doing business with Chinese telecom equipment makers, recovered from two days of losses and were up more than 5 percent.
Several brokerages, including JPMorgan and Goldman Sachs, issued reports saying U.S. investigations are unlikely to have much impact on ZTE's profits, with investors switching focus to 4G spending, which is expected to benefit the company. (Editing by Simon Cameron-Moore)
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