China shares soar to 3-week high as volumes spike, lifting Hong Kong
* HSI +2.2 pct, H-shares +3.0 pct, CSI300 +3.3 pct
* Signs of easing in China property swells trading volumes
* Bernanke's comments spur short covering in dividend plays
* CR Cement surges after positive H1 profit alert
By Clement Tan
HONG KONG, July 11 (Reuters) - China shares spiked to a three-week high on Thursday, buoyed by a report in official media that financing rules may be partially relaxed for real estate firms, boosting the property, construction and financial sectors.
Hong Kong markets were also lifted by dovish comments from U.S. Federal Reserve chairman Ben Bernanke as investors covered short positions in interest rate-sensitive sectors.
At midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings was up 3.3 percent at 2,297.3 points, its highest since June 24. The Shanghai Composite Index climbed 2.2 percent.
The Hang Seng Index rose 2.2 percent to 21,353.7 points, its highest intra-day level since June 10. The China Enterprises Index of the top Chinese listings in Hong Kong jumped 3 percent.
Hong Kong turnover rose markedly from recent levels, while Shanghai volumes were robust after the official China Securities Journal reported that Beijing may conditionally relax rules on financing for real estate firms, citing unidentified analysts.
"Bernanke's comments are supporting rate sensitive counters today, I think some people are covering some short positions in Hong Kong property counters," said Alex Wong, director of asset management at Ample Finance.
"But I am still not quite as enthusiastic about China-related plays for now. The longer term prognosis remains very negative for most and they are all too reactive to news flow," Wong added.
China Vanke climbed 2.8 percent in Shenzhen, while Poly Real Estate spiked 4.4 percent in Shanghai after saying it expects first half profit to have risen 35 percent from a year earlier.
In Hong Kong, China Resources Land soared 5.8 percent. Kaisa Group jumped 7.4 percent.
With the property sector affecting 40 other industries in the world's second-largest economy, investors interpreted the China Securities Journal article as a form of policy easing that lifted other cyclical sectors.
This also comes after underwhelming economic data had stoked fears that second-quarter growth, a figure Beijing is due to release on Monday, could disappoint.
Investors are also watching for June money supply and loan growth, due by July 15. Monthly urban investment, industrial output and retail sales figures are also expected on Monday.
Shares of China Resources Cement looked set for their best day in 10 months, surging 7.3 percent in Hong Kong after the company said it expects first half profit to significantly increase from a year ago.
In Shanghai, China Minsheng Bank jumped 7.3 percent and Industrial Bank soared 8 percent. Shares of these mid-sized banks were among the hardest hit in the cash crunch in June.
But in an echo of the run-up to that mainland crunch, new local currency yuan loans extended by China's big four state-owned banks stood at an unusually large 170 billion yuan ($27.7 billion) in the first week of July, the official Shanghai Securities News said on Thursday.
Traders said similarly aggressive lending by Chinese banks in early June caused the central bank to launch an acute liquidity squeeze in the country's interbank market.
BERNANKE'S TONE-SHIFT HELPS
Sun Hung Kai Properties rose 2.5 percent, while Cheung Kong Holdings rose 2.1 percent. Link REIT (real estate investment trust) gained 1.2 percent.
These high yielding names were among the hardest hit on fears the Fed may begin to scale back its $85 billion a month bond-buying programme as soon as September after Bernanke laid out a roadmap in May for an end to so-called quantitative easing.
But Bernanke shifted his tone late on Wednesday, saying highly accommodative monetary policy for the foreseeable future is needed.
Lenovo shares rose 4.1 percent after major technology research firms ranked it as the world No.1 in PC shipments in the second quarter, although the PC market saw overall sales fall.
Jewellery retailer Chow Tai Fook fell 4.7 percent after an unidentified major shareholder sold a block of 9.4 million shares in a deal worth up to HK$817 million ($105.33 million).