* SSEC +0.1 pct, CSI300 flat, HSI +0.3 pct
* Dollar struggles, pressured by concerns of US protectionism
SHANGHAI, Jan 24 (Reuters) - Hong Kong stocks rose on Tuesday morning thanks to strength in resources shares as U.S President Donald Trump’s trade protectionist stance dented the dollar and tempered concerns over capital outflows.
China stocks were roughly flat from two-week highs set in the previous session amid renewed debt worries after Beijing reported a significantly larger fiscal deficit in 2016.
In Hong Kong, the benchmark Hang Seng index added 0.3 percent, to 22,969.38 points, while Hong Kong China Enterprises Index gained 0.4 percent, to 9,769.37 points.
Trump’s move on Monday to withdraw the United States from the Trans-Pacific Partnership trade deal has weighed on the dollar, making it cheaper to import some raw materials, with an index tracking the sector adding around 3.1 percent by midday.
The dollar was on the defensive after hitting a seven-week low against a basket of major currencies on Monday, while futures contracts of rebar gained nearly 4.3 percent at the lunch break.
Heavily import-dependent paper maker Nine Dragons Paper Holdings Ltd and Lee & Man Paper Manufacturing Ltd jumped, to around 10 percent and 4 percent respectively, at midday.
Shares were also bolstered by Nine Dragons Paper’s surprise earnings upgrade with the company forecasting interim profit to rise over 45 percent.
“Looks like the market would face some difficulty to rise above 23,000 points, since it lacks new capital inflows from the outside,” said Linus Yip, strategist at First Shanghai Securities Ltd, referring to the tepid inflows in recent weeks.
Yip said that Trump’s protectionist stance and consequent lowering of the dollar are lending some support to resource stocks, but he remained cautious about the hurdles on capital inflows to Hong Kong from an expected uptick in U.S. interest rates this year.
In China the blue-chip CSI300 index was unchanged at 3,363.21 points at the end of the morning session, while the Shanghai Composite Index gained 0.1 percent, to 3,139.81 points.
Beijing reported a significantly larger fiscal deficit in 2016 than it targeted, as the world’s second largest economy has relied on government spending to stabilise economic growth in the past year, raising concerns about China’s mounting debt load.
Most sectors retreated modestly, but an index tracking energy stocks advanced 1.3 percent after receiving a boost from heavyweights China Petroleum & Chemical Corp and PetroChina Co Ltd. Both added more than 2 percent by the lunch break on restructuring hopes.
Reporting by Jackie Cai and John Ruwitch; Editing by Shri Navaratnam