China shares rebound after c.bank cash injections, buoy Hong Kong
* HSI +0.6 pct, H-shares +1.7 pct, CSI300 +0.8 pct
* Shanghai Composite creeps back above 2,000-point level
* Profit guidance in focus: ZTE, GOME up; Daphne sinks
* CNOOC sinks to 6-mth low after lower-than-expected 2014 forecast
By Clement Tan
HONG KONG, Jan 21 (Reuters) - China shares rebounded from a six-month low on Tuesday, lifting Hong Kong markets, as cash rates eased in the mainland after the Chinese central bank offered emergency funds to ease the latest cash squeeze.
However, the biggest individual price moves on the day were driven by encouraging profit guidance issued by several firms including shoe retailer Daphne and telecom equipment maker ZTE Corp, ahead of the earnings season starting in March.
By midday, the Hang Seng Index gained 0.6 percent to 23,058.8 points, while the China Enterprises Index outperformed with a 1.7 percent climb after slumping to a 4-1/2-month low on Monday.
The CSI300 of the largest Shanghai and Shenzhen A-share listings, which closed on Monday at its lowest since July 9, rose 0.7 percent. The Shanghai Composite Index gained 0.6 percent to creep back above the much-watched 2,000-point level at 2,004 points.
"The cash injections are helping to calm the market today and the reason for the bounce for most Chinese cyclicals, especially the banking names," said Jackson Wong, Tanrich Securities' vice-president for equity sales.
China's money market rates fell sharply on Tuesday after the People's Bank of China dumped more than 255 billion yuan ($42 billion) into the financial system, easing concerns that another credit crunch was underway less than a month after a late December squeeze.
Hong Kong shares of two of China's "Big Four" lenders, Industrial and Commercial Bank of China and China Construction Bank, each rose more than 2 percent. In Shanghai, mid-sized lender Merchant Bank and Industrial Bank each gained about 1 percent.
"Everybody knows Beijing will not loosen (policy) any more, but the PBoC move is a sign they will offer support. For the equity markets, it just means we are probably holding at current levels until Chinese New Year next week," Tanrich's Wong added.
Mainland markets will be shut Jan. 31 to Feb. 6 for the holiday, while Hong Kong will see half-day trade on Jan. 30 and will be closed Jan. 31 to Feb. 3.
However, gains were not accompanied by a spike in volumes in either market. Instead, on the mainland, investors channeled funds towards the second batch of eight initial public offerings that made their listing debuts in Shenzhen, five of them on the ChiNext board.
Trading in several of them has been repeatedly suspended after tripping circuit breakers meant to stem excessive price moves. All except Sunrise Technology are now up more than 40 percent.
Lenovo Group shares spiked 3.5 percent to their highest since April 2000 after the world's largest PC maker said it was in preliminary talks with a third party about a potential acquisition, after a source told Reuters the Chinese company had resumed discussions to buy International Business Machines Corp's (IBM) low-end server unit.
EARNINGS BACK IN FOCUS
A slew of profit guidance by Chinese companies triggered the biggest price moves on the day. GOME Electrical Appliances surged 8.7 percent after saying it expects gross profit to rise more than 18 percent in 2013.
ZTE Corp shares rose 3.7 percent in Shenzhen and 0.6 percent in Hong Kong after the world's fifth-largest telecom equipment maker said on Monday that it had swung to a profit last year after its first annual loss in 2012.
But shoe retailer Daphne International tanked 5.6 percent after saying it expects a "significant decline" in last year's net profit and a 5.4 percent decline in same-store sales growth in the fourth quarter from the year before.
Losses on the day pared hefty gains last week after a host of broker upgrades, including Nomura's 90 percent increase in its target price for Daphne on Jan. 7.
CNOOC Ltd shares dived 5.4 percent to the lowest since July after the Chinese oil giant said it is aiming for an increase in output of up to 4.3 percent this year, excluding contributions from acquisition Nexen. The forecast was well below its average annual growth target for 2011-2015.