Hong Kong shares set for best day in nearly 3 months, China up again

Mon Feb 10, 2014 11:51pm EST

* HSI +1.6 pct, H-shares +2.5 pct, CSI300 +0.5 pct

* Hong Kong and H-shares at one-week high on policy optimism

* Chinese insurers and energy plays lead gains

By Yimou Lee

HONG KONG, Feb 11 (Reuters) - Hong Kong shares are set to post their best daily gain in nearly 3 months on Tuesday, led by Chinese insurers and energy counters on optimism that Beijing will likely unveil more policy that could favor earnings growth in some sectors.

China shares reversed early losses and extended gains after closing at their highest in nearly six weeks on Monday as liquidity concerns eased after the Lunar New Year holiday.

By midday, the Hang Seng Index was up 1.6 percent at 21,925.04 points and appeared on track for its best day since Nov. 18. The China Enterprises Index of the top Chinese listings in Hong Kong gained 2.5 percent to its highest in almost two weeks.

The CSI300 index of the leading Shanghai and Shenzhen A-share listings rose 0.5 percent to its highest since Jan. 6. The Shanghai Composite Index was up 0.4 percent at 2,093.58 points. Both appeared on track for a third straight daily gain.

"Ahead of the National People's Congress, there are some expectations about the upcoming policy initiatives," said Ben Kwong, Hong Kong-based chief operating officer of stockbroker KGI Asia, referring to the March meeting of China's rubber stamp parliament.

"After the Lunar New Year holiday, the liquidity situation in China is not that tight, and we also expect less IPO activities in the A-share market this month," Kwong said.

China has announced a litany of policy announcements seen favourable to earnings growth for sectors from autos to insurers and infrastructure.

Leading gains were Chinese energy and insurer plays. PetroChina, Asia's largest oil and gas producer, rose 1.7 percent after its parent made one of China's largest gas discoveries in more than a decade. China Petroleum & Chemical Corp (Sinopec) gained 2.4 percent.

Ping An Insurance Group Co of China Ltd jumped 4.6 percent to its highest in almost two weeks, while China Life Insurance surged 5.1 percent and was set for its best day in more than two months.

Shares in China Shipping Container Lines rose 2.7 percent in Hong Kong and 0.9 percent in Shanghai after Barclays analysts upgraded the company to "overweight" from "equal Weight".

Haitian Flavouring & Food Co. jumped 44 percent in its debut before trading was halted in Shanghai. The Shanghai Stock Exchange will crack down on any unusual trading patterns detected in Hai Tian Flavouring's market debut later on Tuesday, the bourse announced on its microblog feed.