Hong Kong shares hover near 21-month high, China climbs

Mon Feb 4, 2013 12:23am EST

* HSI +0.5 pct, H-shares +0.3 pct, CSI300 +0.4 pct

* Investors chase rally in Chinese banking sector

* Ping An shares in HK down in intra-day reversal

* Kweichow Moutai lingers at one-year low

By Clement Tan

HONG KONG, Feb 4 (Reuters) - Hong Kong shares rose on Monday to linger near 21-month highs, as investors gave further chase to the rally in the Chinese banking sector at the start of the last full week of trading before the Lunar New Year holiday.

Data over the weekend showed growth in China's increasingly important services sector rose for the fourth straight month in January, though the slim increase added to evidence that the recovery in the world's second-largest economy remains a modest one.

The Hang Seng Index went into the trading break up 0.5 percent at 23,844.1 after testing highs since late April 2011 in early trade. The China Enterprises Index of the top Chinese listings in Hong Kong rose 0.2 percent.

In the mainland, the CSI300 of the top Shanghai and Shenzhen listings gained 0.4 percent, while the Shanghai Composite Index climbed 0.6 percent. Both indexes have now bounced 31 and 24 percent, respectively, from a Dec. 3 low.

"In the short term, strength in the A-share market is going to drive the Hong Kong market," said Jackson Wong, Tanrich Securities' vice-president of equity sales.

"Most investors still remain very invested in the market, torn between wanting to take some profit because they sense a short-term correction coming up and not wanting to miss the next leg up," Wong added.

Shares of Bank of China climbed 2.1 percent in Hong Kong to its highest since June 2011. Gains exceeding 44 percent from a Sept. 5 low have now prodded BOC's relative strength index (RSI) values to its most overbought level since January 2007.

Smaller rival China Minsheng Bank jumped another 4.1 percent in Hong Kong and 3.1 percent in Shanghai to new multi-month highs.

Shares of Ping An Insurance dropped 2 percent in Hong Kong after the China Insurance Regulatory Commission approved the sale of HSBC's remaining $7.4 billion stake in the mainland's second-largest insurer to a group controlled by Thailand's richest man.

Ping An's shares in Hong Kong had opened up more than 2 percent, but were trading in Hong Kong down at HK$69.45 in a sharp intra-day reversal and above the HK$59 per share that HSBC had priced its sale. Its Shanghai shares rose 1.2 percent.

PROPERTY SECTOR WEAK

Gains in the A-share market were limited by weakness in the property sector, hurt by a local news report of rising home prices that fanned worries of fresh tightening measures on home purchases.

Poly Real Estate shed 1 percent in Shanghai with the Shanghai property sub-index an underperformer among sectors, down 0.5 percent. China Vanke shed 0.8 percent in Shenzhen.

Shares of Chinese premium booze producers were also hit by a People's Daily commentary urging government departments to stop using public money during the upcoming Lunar New Year as part of an official campaign to fight corruption.

Kweichow Moutai fell 2 percent in Shanghai, testing January 2012 lows. Its shares have slumped more than 31 percent from a July 12 peak.