UPDATE 1-PRESS DIGEST - China - Sept 17

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BEIJING/SHANGHAI, Sept 17 (Reuters) - Chinese newspapers available in Beijing and Shanghai carried the following stories on Wednesday. Reuters has not checked the stories and does not vouch for their accuracy.

CHINA SECURITIES JOURNAL

-- The China Securities Regulatory Commission has issued a memorandum prohibiting executives of listed companies from exercising stock options under management incentive schemes if a company makes a loss during the options' lock-up period, or if profits fall below the average during the three years before the incentives were granted.

-- Lu'an Group, a Chinese coal producer based in Shanxi province, plans to sell stakes to foreign strategic investors before launching an initial public offering overseas, Chairman Ren Runhou said. The company has hired Citigroup (C.N) and BOC International to help introduce it to investors but has not given a timetable for listing.

SHANGHAI SECURITIES NEWS

-- China has set up a company to run an insurance protection fund that would rescue troubled insurers. The company has registered capital of 100 million yuan ($14.6 million) and has appointed Wei Yingning, vice chairman of the China Insurance Regulatory Commission, as chairman.

-- Beiqi Foton (600166.SS), a Chinese partner of Daimler AG (DAIGn.DE), said it sold 30,254 vehicles in August, up 15.05 percent from a year earlier.

-- Shanghai Construction Co (600170.SS) has won contracts for a hotel project worth 620 million yuan.

-- Shanghai Zhenhua Port Machinery (600320.SS), the world's biggest port equipment maker, said it had signed a contract with a Spanish company worth 2 billion yuan.

-- Real estate developer Financial Street 000402.SZ said that its management bought 390,000 shares of the company from the secondary market last Friday, using their own money.

CHINA DAILY (www.chinadaily.com.cn)

--Zhai Zhigang, a reserve astronaut for the Shenzhou V and VI missions, is poised to become China's first spacewalker. Three 42-year-old astronauts -- Zhai, Liu Boming and Jing Haipeng - have been selected to carry out the country's third manned space mission, which will last from Sept 25-28.

--Rescuers recovered five more bodies buried under the iron-ore sludge in Shanxi province, taking the death toll to 259.

PEOPLE'S DAILY

--The State Council said a nationwide survey has found that most infant milk power produced in the country was safe, although it acknowledged that 20 percent of producers were found to have added melamine to the baby milk formulas. So far two infants have died and hundreds of others are suffering from kidney stones and other problems linked to the melamine-tainted formulas. ($1=6.849 Yuan) (Compiled by Beijing and Shanghai Newsrooms; Editing by Edmund Klamann and Ken Wills)