* HK shares gain for third session to end at 11-month high
* China shares scale 14-month peak, recoup last Wed's losses
* PMI data spurs buying in metal, energy, shipping stocks
(Updates to close)
By Parvathy Ullatil and Claire Zhang
HONG KONG/SHANGHAI, Aug 3 Hong Kong and China
shares rose for a third day on Monday as positive factory
activity data for July prompted strong buying in the power, metal
and oil sectors.
CLSA's China Purchasing Managers' Index (PMI), a key gauge of
the country's manufacturing sector, rose to a one-year high in
July as resurgent domestic demand spurred manufacturing activity
in the world's third-largest economy. The CLSA data dovetailed
with that of China's official PMI released on Saturday.
Investors appeared to shrug off worries about a possible
clampdown on bank lending or even a tightening of monetary
policy, which triggered last Wednesday's sell-off.
Analysts predicted a continued strong run for the stock
markets as industrial stocks find favour on the back of improved
economic data from major economies, but warned that a downside
surprise in key earnings could throw a spanner in the works.
"After five months of the PMI staying above the 50 level,
investors are convinced the economy in China will keep improving
and exports will pick up eventually," said Philip Chan, head of
research with CAF Securities.
METAL, SHIPPING STOCKS SHINE
The benchmark Hang Seng Index .HSI finished up 1.14 percent
or 233.93 points at 20,807.26, its highest closing level since
early September 2008.
Turnover slipped to HK$77.9 billion from Friday's HK$79.6
The China Enterprises Index .HSCE, which represents top
locally listed mainland Chinese stocks, was 2.02 percent or
244.61 points higher at 12,368.20.
Tencent (0700.HK), which operates China's largest online
messaging community, jumped 5.1 percent to HK$109.90 after Credit
Suisse raised its target price on the stock to HK$118.20 from
HK$86. The investment house reiterated its "outperform" rating on
the stock and raised Tencent's estimated earnings per share for
2009 by 6 percent on higher gaming and advertising revenues.
The strong PMI data spurred buying in metal, shipping and
refinery stocks, helping Sinopec Shanghai Petrochemical (0338.HK)
soar 10.1 percent to HK$3.93.
Gold miner Zijin Mining (2899.HK) gained 6.9 percent as the
price of the precious metal built on Friday's steep gains while
the dollar slid to its lowest level in 2009 amid growing investor
Aluminum Corp of China (2600.HK) shot up 7.2 percent after
the world's third-largest alumina producer lifted the spot price
of alumina by 4.35 percent last Friday.
China Shipping Container Lines (2866.HK) vaulted 9.9 percent
despite flagging a loss in the first half of 2009, as investors
bet trade would pick up in coming months as the global economy
shows signs of improvement.
Port operator Cosco Pacific (1199.HK) bulked up 17.9 percent
to finish at a one-year closing high of HK$12.76.
RALLY NOT YET OVER
The Shanghai Composite Index .SSEC ended 1.48 percent or
50.528 points higher at a 14-month closing high of 3,462.590
points, climbing for a third session in a row as the market
recouped all of the losses from last Wednesday's sell-off, which
marked its biggest one-day loss this year.
Gaining Shanghai A shares outnumbered losers by 772 to 160,
while turnover for Shanghai A shares rose to 235.8 billion yuan
($34.5 billion) from Friday's 223.0 billion yuan.
"The rally is not over yet," said Huatai Securities analyst
Zhou Lin, who added that the uptrend would remain intact as long
as China's basic policies remained unchanged.
Steel shares climbed after the official Shanghai Securities
News reported that Chinese steel industry profit in July may have
exceeded 20 billion yuan, for its largest monthly gain in eight
years, as domestic prices rose. [ID:nSHA165085]
Steel reinforcing bar futures <0#SRB:> traded on the Shanghai
Futures Exchange also surged 4 percent on Monday. [ID:nSHA371607]
Wuhan Steel (600005.SS) jumped 6.5 percent to 12.28 yuan.
Spirits makers outperformed, with Kweichow Moutai (600519.SS)
up 3.8 percent at 155.71 yuan and Sichuan Swellfun (600779.SS) up
3.1 percent at 17.79 yuan.
China levied higher consumption taxes on high-end spirits
makers effective from Aug. 1, but the stocks rose on expectations
that the tax increase would provide a pretext for significant
product price increases.
China Southern Airlines (600029.SS) advanced 3 percent to
7.22 yuan after saying it planned to sell six A300 aircraft for
$125 million in a deal that would generate about 46.58 million
yuan in profit.
Shenzhen Development Bank (000001.SZ) lost 1.26 percent to
25.85 yuan after saying it had not yet made any decision on its
mid-year dividend plans. Its shares had been suspended since July
30, during which time the index gained 4.25 percent.
The shares climbed 3 percent last Wednesday, when the index
dived 5 percent, after domestic media reported it would announce
a bonus share plan for shareholders.
(Editing by Edmund Klamann and Chris Lewis)