August 30, 2019 / 4:42 AM / 3 months ago

China stocks gain ground on trade talk relief

* Shanghai shares gain 0.2%, blue-chips up 0.6%, Hang Seng up 0.7%

* U.S., China say talks ongoing, Sept in-person meet on the cards

* China Aug factory activity seen shrinking for 4th month - poll

HONG KONG, August 30 (Reuters) - The Chinese stock market rose on Friday as Beijing and Washington signalled further trade talks ahead, easing fears of an all-out tariff escalation.

** At the midday break, the Shanghai Composite index was up 0.2% at 2,897.59 points, unchanged on a weekly basis. The CSI300 index gained 0.6% on the day but down 0.2% week-on-week. ** CSI300’s financial sector sub-index was higher by 0.2%, the consumer staples sector added 1.8%, the real estate index was down 0.8% and the healthcare sub-index was up 1.4%. ** Chinese H-shares listed in Hong Kong rose 1.3%. The city’s Hang Seng Index was up 0.7% at 25,880.82, down 1.1% so far this week. ** The smaller Shenzhen index was up 0.2% and the start-up board ChiNext Composite index was higher by 0.3%. ** The United States and China indicated on Thursday that they will resume trade talks, with U.S. President Donald Trump saying some discussions were taking place and that more are scheduled. ** China’s commerce ministry also said a September round of meetings was being discussed by the two sides, but said it was important for Washington to cancel a tariff increase. ** A new round of U.S. tariffs on some Chinese goods is scheduled to take effect on Sunday, threatening to escalate an already bitter trade war. ** Factory activity in China is expected to have contracted for the fourth straight month in August amid trade war escalation, a Reuters poll showed. ** The official Purchasing Managers’ Index (PMI) for August is expected to be unchanged at 49.7 from July but stay below the 50-point mark that separates expansion from contraction. ** “We remain cautious toward Chinese equities in general given the macro headwinds and increasing uncertainties in U.S.-China trade negotiations,” Morgan Stanley analysts said in a note on Friday. ** Stocks around the region also rallied on trade talk optimism, with MSCI’s Asia ex-Japan stock index firmer by 1.1% while Japan’s Nikkei index was up 1.4%. ** The yuan was quoted at 7.1511 per U.S. dollar, 0.11% weaker than the previous close of 7.143. ** The largest percentage gainers in the main Shanghai Composite index were Shenzhen Heungkong Holding Co Ltd and Zhejiang Guangsha Co Ltd, both up 10.1%, followed by Zhejiang Huatie Construction Safety Science and Technology Co Ltd, 10% higher. ** As of 0400 GMT, China’s A-shares were trading at a premium of 28.09% over the Hong Kong-listed H-shares. ** The Shanghai stock index is below its 50-day moving average and above its 200-day moving average.

Reporting by Noah Sin; Editing by Sriraj Kalluvila

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