Hong Kong, China shares headed for tepid end to solid week

Fri May 10, 2013 1:05am EDT

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* HSI -0.2 pct, H-shares +0.2 pct, CSI300 -0.1 pct

* H-share index headed for 2nd best weekly gain this year

* Chalco jumps in short squeeze ahead of HSCE rebalancing

* CR Power sinks on merger news as trading resumes

By Clement Tan

HONG KONG, May 10 (Reuters) - Hong Kong and China shares looked set to end the week on a tepid note on Friday, but China Resources Power tumbled 10 percent as its shares resumed trading for the first time this week after the announcement of a planned merger.

Growth-sensitive sectors were again strong despite a pledge by the Chinese central bank late on Thursday to ward off inflationary risks despite the country's patchy economic recovery, with more economic data due in the coming days.

At midday, the Hang Seng Index was down 0.2 percent, but up 2.1 percent on the week. The China Enterprises Index of the leading Chinese listings in Hong Kong climbed 0.2 percent, set for its second-best week in 2013, up 4.1 percent. This will be their third-straight weekly gain.

On the mainland, the CSI300 slipped 0.1 percent, trimming weekly gains to 1.3 percent. The Shanghai Composite Index edged up 0.1 percent and is up 1.3 percent for the week. This will be their second-straight weekly gain.

Beijing could release April data for money supply and loan growth as early as Friday. Chinese banks likely granted 800 billion yuan ($123 billion) in new loans in April, down from 1.06 trillion yuan in March, according to a Reuters poll.

"It's highly unlikely we will see a rate cut from the Chinese central bank after the statement last night, so there's little catalyst for a meaningful rally," said Hong Hao, chief strategist at Bank of Communication International.

"It's still not a good environment to take too much risk at this point, I won't be surprised if a selloff happens at some point in May," he added.

On Friday, Aluminum Corporation of China (Chalco) jumped 3.9 percent in Hong Kong as investors rushed to cover short bets ahead of the release of the quarterly review of the Hang Seng family of indexes after markets close for the week.

Chalco is up 10.8 percent in Hong Kong this week to date, its best since September, which has helped cut losses on the year to 10.4 percent. This compares to the 1.3 percent slide on the China Enterprises Index, which counts Chalco as a component.

China's largest aluminum producer also announced late on Thursday it will sell about 8.2 billion yuan of assets, including production plants to mainly its parent company, according to filings to the Hong Kong and Shanghai exchanges.

Its Shanghai listing climbed 1.5 percent.

China Resources Power was headed for its worst single-day loss since June 2008 as its shares traded for the first time this week after being suspended on Monday. The company announced its parent was merging CR Power with China Resources Gas , whose shares fell 2.5 percent.

China Resources Power Holdings Co also said on Friday it would buy wind farms in 10 provinces in China from its controlling shareholder, sate-owned conglomerate China Resources (Holdings) Co Ltd, for HK$4.3 billion ($553 million).

China Mobile shares could come under some pressure after the country's largest mobile operator said in a statement at midday that the National Audit Office pointed out some weakness in the company's accounting and internal management, with most of the identified problems rectified.

Its shares were up 0.1 percent in Hong Kong at midday.

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