* Hang Seng up 2.2 pct, Shanghai snaps 8-day losing streak
* Alternative energy plays rise on German plan to shutter reactors
* Hutchison up 5 pct on report of Husky Energy HK IPO
* China mutual funds still cautious on equities: Reuters poll (Updates to close)
By Vikram Subhedar and Clement Tan
HONG KONG, May 31 (Reuters) - Hong Kong and China shares jumped on Tuesday, swept up in a broad rally across Asian markets, with gains driven by power and energy sectors while improving volumes suggested more investors were stepping back into risky assets.
Germany’s plan to shut all nuclear reactors by 2022 lifted alternative energy companies, such as wind-turbine makers, while a tariff hike in China to tackle a severe electricity shortage drove up shares of power producers and coal suppliers.
The Hang Seng index rose 2.2 percent, its biggest single-day gain this year. The index, which had appeared to be headed for its worst monthly performance since last August, ended down just 0.2 percent for May.
Turnover on the exchange rose to HK$90 billion, the highest since April 6, although part of the jump was due to passive investors adjusting portfolios to reflect changes in the MSCI China index which became effective after the close.
Traders said there was chatter in the market that China’s manufacturing data for April, scheduled to be released on Wednesday, would be stronger than expected.
Manufacturing activity in China is expected to slow month-over-month but still show expansion for the 27th straight month according to a Reuters survey. [ID:nL3E7GR0LK]
“China’s PMI is the wildcard,” said a Hong Kong-based trader, adding that with reports of fresh financial aid for Greece and short-term rates in China falling, markets could extend gains as June has historically been a good month for Asian markets.
Shares of Hutchison Whampoa rose 5 percent on nearly 5.5 times their average 30-day volume on reports that Canadian oil producer Husky Energy , in which Hutch has a 35 percent stake, was planning a Hong Kong listing. [ID:nL3E7GU040]
Chinese power producers rose, led by China Resources Power’s 2.7 percent gain, on the announcement of tariff hikes while soaring demand for coal underpinned the moves higher in coal producers. Yanzhou Coal rose 4.7 percent while larger rival China Shenhua jumped 3.2 percent.
China shares snapped an eight-session losing streak, boosted by outperforming alternative energy stocks and bargain hunting among oversold industrial plays.
Germany’s plans to shut down all its nuclear reactors by 2022 lifted solar and wind-power companies across Asia. [ID:nLDE74T0GY]
Sinovel Wind Group Co , China’s biggest maker of wind turbines with a US$8.6 million market cap, recorded its biggest one-day gain, jumping 7.7 percent in more than two times its 30-day average volume.
China Longyuan Power Group Corp Ltd , the world’s fifth-largest wind power generator, jumped 2.7 percent on over twice its average-30 day volumes in Hong Kong.
Solar plays also jumped. GCL Poly Energy , the country’s largest polysilicon company, bounced 5.3 percent paring its monthly losses to 24.5 percent.
A-share turnover picked up on Tuesday from Monday’s four-month low, but hovered at 77 billion yuan, which is still about 40 percent below the 2011 average, currently at 128.8 billion yuan.
The benchmark Shanghai Composite Index shrugged off midday losses to close up 1.4 percent at 2,743.5 points, bouncing off the key 2,700 support in morning trade.
“This rebound is mainly technical, how much stocks go down in the near term depends a lot on the bulk of the economic data to be released in mid-June,” said Wen Lijun, an analyst with Nanjing Securities.
Expectations of a strong manufacturing data and a rising market drove retail investors into beaten-down industrials.
Sany Heavy Industry Co Ltd gained 9.7 percent on Tuesday, lifting the stock out of its technically oversold status. It 14-day relative strength index (RSI) value had hit a one-year low on Monday.
Long-only investors remain cautious, a Reuters poll showed, with mutual funds reducing their recommended equity weightings in May and doubling their weightings for bonds to the highest in two years. [ID:nB9E7EK00I]
Editing by Kim Coghill