Hong Kong, China shares regain a little ground, state energy firms down

Tue Jun 24, 2014 1:04am EDT

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

* PetroChina down again after state auditor's report (Updates to midday)

By Grace Li

HONG KONG, June 24 (Reuters) - Hong Kong shares early on Tuesday clawed back some of the previous session's big losses, while China's onshore markets also edged up in choppy morning trade.

Gains in Hong Kong were capped largely by losses in Chinese gas and oil firms, which were impacted by an anti-corruption drive in the sector.

At midday, the Hang Seng Index and the China Enterprises Index of the top Chinese listings in Hong Kong both were up 0.4 percent. The Hang Seng, which tumbled 1.7 percent on Monday to its lowest close since May 21, finished the session at 22,884.80 points.

The CSI300 of the leading Shanghai and Shenzhen A-share listings rose 0.4 percent, as did the Shanghai Composite Index, which was at 2,032.38 points.

On Monday, the Hang Seng was up at midday, thanks to a good China factory survey, but then it plunged in the afternoon - mystifying many analysts - and ended the day down nearly 400 points.

"The drop was totally unexpected, with a volatility that hasn't been seen for a long time," said Larry Jiang, chief strategist at Guotai Junan International.

He add that index futures-related trading and profit-taking by some institutional investors could have been contributing factors.

"But it's not likely the same thing would happen again in the near term, with the U.S markets closing at record highs recently and the Chinese economy stabilising," Jiang said.

Some other analysts also said the concerns over political stability in the former British colony could have played a role on Monday.

An unofficial referendum on democratic reforms in the city, part of a civil campaign branded illegal by the former local government and by Communist Party authorities in Beijing, started on Friday and has drawn hundreds of thousands of votes.

On Tuesday, Chinese state energy firms listed in Hong Kong were broadly weaker, amid an anti-graft campaign targetting the sector. Late on Monday, China formally charged a former head of the country's energy regulator with corruption.

CNOOC shed 1 percent, the biggest index drag, and China Petroleum & Chemical Corp was off 0.6 percent.

PetroChina lost another 0.5 percent after Monday's similar drop, hurt by a report last week by the state auditor on irregularity found at its parent company China National Petroleum Corp.

(Editing by Richard Borsuk)

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