* CSI300 -1.4 pct; SSEC -2.4 pct; HSI +0.4 pct
* Investors dump shares, shrugging off media support
* Hong Kong up on Greek deal optimism
By Samuel Shen and Pete Sweeney
SHANGHAI, June 23 (Reuters) - China stocks extended losses on Tuesday morning following last week’s 13 percent collapse, as investors cut leverage despite a chorus of official media saying the bull market is not yet over.
Chinese market resumed trading after a public holiday on Monday, but sentiment remained weak after last week’s sharp correction which was triggered by fresh government moves to tighten margin financing, and worsened by a tidal wave of initial public offerings that sapped liquidity.
But Hong Kong stocks were firmer, drawing support from buoyant global markets on hopes of an eleventh hour deal between Greece and its international creditors.
China’s key CSI300 index fell 1.4 percent by midday, while the Shanghai benchmark lost 2.4 percent.
In Hong Kong, the benchmark Hang Seng index added 0.4 percent, while the Hong Kong China Enterprises Index gained 1.0 percent.
Chinese investors used an early morning rebound on Tuesday to dump shares, even as official state-run financial newspapers in China published front-page commentaries arguing that the logic supporting the bull market has not changed.
Some analysts attributed selling to margin calls triggered by the market’s tumble.
“Many high-leveraged investors are forced to sell shares at all costs,” said Zhou Lin, analyst at Huatai Securities Co.
“Apparently, regulators are stepping up their efforts to reduce leverage, so I don’t think the market can resume its uptrend anytime soon.”
In a sign that the government-led campaign of “deleveraging” is having an impact, outstanding margin debt in Shanghai fell for the first time in a month last Friday, to 1.48 trillion yuan ($238.4 billion).
Investors are also worried that the government could be less eager to ease monetary policy, as fresh data points to an improvement in economic activities.
The real estate market has recovered in some major cities such as Shenzhen, China’s factory activity showed some signs of stabilising in June, and a private survey of Chinese firms showed that China’s economy saw a broad-based rebound in the second quarter.
Stocks fell across the board, with IT and infrastructure taking the lead. But banks were firm, with a key subindex up 0.1 percent by midday.
Hong Kong stocks took cues from optimism in global markets, after Greece’s latest budget proposals raised hopes it would stave off a debt default and reach a deal with lenders later this week.
$1 = 6.2082 Chinese yuan Editing by Jacqueline Wong