* HK->Shanghai Connect daily quota used 2.6%, Shanghai->HK daily quota used 1.2%
* FTSE China A50 +1.1%
SHANGHAI, Dec 30 (Reuters) - China and Hong Kong stocks rose on Monday on expectation Beijing’s decision to switch the benchmark for floating-rate loans could lower financing costs, while a solid forecast for retail sales in 2019 also supported investor sentiment.
** The CSI300 index rose 1.2%, to 4,071.95, by the end of the morning session, while the Shanghai Composite Index gained 0.9%, to 3,033.33.
** The Hang Seng index added 0.6%, to 28,403.75, while the Hong Kong China Enterprises Index gained 0.6%, to 11,264.43.
** China’s central bank will use the loan prime rate (LPR) as a new benchmark for pricing existing floating-rate loans, in a step that analysts say could help lower borrowing costs and underpin economic growth.
** “The purpose of the step is to make interest rates more market-driven and help lower financing costs,” said Wen Bin, an economist at Minsheng Bank in Beijing.
** Overall it’s a favourable news for the equities market, though the impact on bond market could be quite limited, Huatai Securities said in a report.
** China’s retail sales are expected to increase 8% in 2019 to 41.1 trillion yuan ($5.89 trillion), the official Xinhua News Agency reported on Monday.
** Consumer and securities firms led the gains on the mainland, while banks retreated as their profitability is likely to be hit by the LPR move.
** The Commerce Ministry has “proactively dealt with” trade frictions with the United States this year, it said on Sunday after an annual work conference.
** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.22%, while Japan’s Nikkei index was down 0.69%.
** The yuan was quoted at 6.982 per U.S. dollar, 0.19% firmer than the previous close of 6.9956.
** As of 0410 GMT, China’s A-shares were trading at a premium of 25.72% over the Hong Kong-listed H-shares. ($1 = 6.9818 Chinese yuan) (Reporting by Luoyan Liu and Brenda Goh; Editing by Subhranshu Sahu)