UPDATE 1-PRESS DIGEST - China - Oct 10

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BEIJING/SHANGHAI, Oct 10 (Reuters) - Chinese newspapers available in Beijing and Shanghai carried the following stories on Friday. Reuters has not checked the stories and does not vouch for their accuracy.

FINANCIAL NEWS

-- China's securities watchdog has ordered listed firms to dole out at least an average of 10 percent of their distributable profit to shareholders in cash. China's listed companies often pay dividend in shares.

-- Bank of China and China Construction Bank, two of China's largest lenders, see limited impact on their profits from the recent interest rate cut, according to the companies.

CHINA DAILY (www.chinadaily.com.cn)

-- China's state assets watchdog is set to ban state-owned enterprise (SOE) employees, particularly management staff, from owning shares in SOE affiliates and subsidiaries, in a move seen as an attempt to stop state assets ending up in private hands.

-- Animal companions have played a positive role in socio-emotional development on China's only children, a study said. China had more than 90 million only children by 2006 due to the one-child-per-family policy introduced in the 1970s.

PEOPLE'S DAILY

-- China's central government has given 300 million yuan in subsidies to milk farmers in six provinces that had been hit hard by the recent milk scandal involving the industrial additive melamine.

CHINA SECURITIES JOURNAL

-- Sany Heavy Industry Co (600031.SS) said it would place about 117.9 million new shares at a price of 16.80 yuan each with 10 investors, including its controlling shareholder, to buy a group company making heavy excavators.

SHANGHAI SECURITIES NEWS

-- The China Securities Regulatory Commission formally announced regulations designed to encourage companies to pay cash dividends and buy back their own shares. Companies that have not paid cash dividends comprising 30 percent of their distributable profit over the previous three years will not be allowed to raise money from the securities markets.

-- Chongqing Changan Automobile Co (000625.SZ) said it would suspend trade in its shares until Oct. 17, when it would announce a major corporate action. It did not elaborate.

-- Industry sources say the initial group of brokerages allowed to take part in margin trade and short-selling of stocks will be chosen from among 11 securities firms. Between 70 and 80 stocks will be tradable in the initial stage. Testing of the system for trade will occur on Oct. 25 and Nov. 1.

SECURITIES TIMES

-- A total of 52 bond funds have now been established or obtained regulatory approval, and they now account for nearly 10 percent of fund industry assets, a record high.

-- Margin trade and short-selling of stocks is expected to start in December at the earliest.

-- Half a dozen more companies, including Xishan Coal 000983.SZ and Yinglite (000635.SZ), said controlling shareholders had slightly raised their stakes through purchases of shares from the market in recent days. ($1 = 6.82 yuan)