* CSI300 +3.5 pct; SSEC +3.4 pct; HSI +1.4 pct
* China c.bank expand bank re-lending scheme
* Upcoming five-year plan boosts stimulus hopes
SHANGHAI, Oct 12 (Reuters) - China shares jumped over 3 percent on Monday to their highest level in seven weeks after the central bank took fresh steps to inject liquidity into the struggling economy and said the stock market’s correction “is almost over”.
Investors were also in a buying mood ahead of the 13th five-year economic plan to be announced later this month, expecting stimulus and other growth measures.
Hong Kong stocks were firmer too, extending last week’s 4.4 percent rebound on subdued expectations of a U.S. rate hike this year and a recovery in global commodity prices.
On the mainland, the CSI300 index rose 3.5 percent to 3,458.08 points by midday, while the Shanghai Composite Index gained 3.4 percent, to 3,290.62 points.
Both were at their highest levels since Aug. 24, though still down more than 30 percent from their mid-June highs.
The People’s Bank of China’s said at the weekend that it would expand a pilot scheme that allows banks to borrow money from the central bank using high quality credit assets as collateral.
“The policy may not immediately inject a lot of liquidity into the economy, but it has boosted expectations of monetary easing,” said Wu Kan, head of equity trading at Shanghai-based investment firm Shanshan Finance.
His view was echoed by China International Capital Corp (CICC), which said in a report on Monday that it’s “inevitable” for the central bank to expand the supply of base money as foreign reserves shrink, although it noted that banks currently have little incentive to obtain fresh liquidity in a slowing economy.
Investors were also emboldened by market-soothing comments from deputy central bank governor Yi Gang, who was quoted by official media as saying that China’s stock market correction is “almost over.”
And in Beijing’s latest attempt to prevent a repeat of the summer rout that knocked the market down roughly 40 percent, China issued draft rules over the weekend to govern automated stock trading, which has been blamed in part for its role in the market tumult.
Stocks rose across the board, led by small-caps, with Shenzhen’s growth board ChiNext surging 4.5 percent.
Real estate shares also posted robust gains, boosted by recent data showing in a recovery in property sales.
Poly Real Estate rose 3.3 percent after reporting a 20 percent rise in contract sales during the Jan-Sept period.
In Hong Kong, the Hang Seng index added 1.4 percent to 22,763.43 points, while the Hong Kong China Enterprises Index gained 2.1 percent to 10,620.99.
China telecom giants China Mobile, China Telecom and China Unicom rose on hopes of tower sale announcements. (Reporting by Samuel Shen and Pete Sweeney; Editing by Kim Coghill)