* CSI300 up 0.6 percent
* SSEC up 0.5 percent
* HSI up 0.7 percent
By Pete Sweeney
SHANGHAI, Oct 15 (Reuters) - Chinese stock markets rose on Tuesday, with major indexes lifted by airline stocks and pharmaceuticals, but analyst said sentiment remained cautious given signs of continued pressure on producer pricing power and weakness in overseas markets.
The CSI300 index of the largest Shanghai and Shenzhen A-share listings was up 0.6 percent, while the Shanghai Composite Index was up 0.5 percent at 2,369.8 points.
The gains were made later in the trading session after markets had opened down.
“The market is in a correction phase today, and will be quite volatile in the short term,” said Wang Weijun, analyst at Zheshang Securities in Shanghai.
“The weak CPI and PPI data did not depress the market too much, as most investors have already turned bearish on the Chinese economy. As for the latest PPI data, we estimate most companies’ earnings in Q3 will be gloomy.”
China’s consumer inflation slowed more than expected to 1.6 percent in September, the weakest since January 2010, adding to concerns the economy continues to lose momentum despite a raft of stimulus measures.
The producer price index fell 1.8 percent in September from a year earlier, versus a 1.6 percent fall expected by analysts. It was the 31st consecutive monthly decline, highlighting the pressures that Chinese companies are facing as demand cools and putting increasing strain on their finances.
Mainland airline shares were lifted by sliding oil prices in global markets, which generally boost airline profit margins, and by official plans to cut domestic prices in response by Friday.
Pharmaceutical shares were buoyed by an announcement of policy support for the industry from the National Development and Reform Commission, the country’s top economic planning body.
Air China dominated the sector, rising 9.92 percent, near the maximum allowed, while pharma shares were led by China Resources Double-Crane Pharmaceutical Co Ltd , which rose by the 10 percent limit.
A major underperformer was construction machinery manufacturer Zoomlion, which warned it could see net income fall by as much as 90 percent in the third quarter.
The index moves mirrored wider Asian performance, with MSCI’s broadest index of Asia-Pacific shares outside Japan gaining a modest 0.1 percent - still within reach of seven-month lows hit at the start of the week.
Hong Kong shares outperformed their mainland peers. By midday, the Hang Seng Index was up 0.7 percent at 23,201.1 points. The China Enterprises Index of the top Chinese listings in Hong Kong gained 0.76 percent.
Both indexes were lifted by a rise by HSI heavyweight internet service provider Tencent Holdings Ltd, as investors applauded its decision to invest in a Chinese health portal Guahao.com, which could also benefit from policy support.
Alfred Chan, chief dealer at Cheer Pearl Investment Ltd. in Hong Kong, credited Hong Kong’s performance to relief that the Hong Kong government had managed to downsize the Occupy Central democracy protests in the city, and to signals from the U.S. Federal Reserve that they might slow the tempo of interest rate increases.
“The government is anxious to bring everything back to law and order,” he said. “After the fall from over 25,300 points, I think a consolidation could happen.”
Reporting by Pete Sweeney and the Shanghai Newsroom; Editing by Shri Navaratnam