* CSI300 +1.2 pct; SSEC +1.9 pct; HSI 0.9 pct
* CSRC denies it intentionally sought to quash rally
* GDP data has marginally positive impact on stocks
By Sue-Lin Wong
SHANGHAI, Jan 20 (Reuters) - Chinese shares rebounded on Tuesday from their biggest tumble since the global financial crisis the day before, after the stock regulator denied speculation it had intentionally sought to suppress the market’s rally.
The market also took some comfort from China’s fourth-quarter growth data, which came in better than expected, but that had only a marginal impact on stocks.
Analysts said the focus of investors remained on capital flows rather than economic fundamentals.
“The GDP data looks to have had some positive impact but the key focus will still be capital flows,” said Wang Weijun, an analyst at Zheshang Securities in Shanghai.
He said the market had risen sharply over the past few months and was poised for a correction. China’s key share indexes rose 40 percent in the fourth quarter.
The CSI300 index ended 1.2 percent up, at 3,396.22 points on Tuesday, while the Shanghai Composite Index gained 1.9 percent, to 3,173.05 points.
Over in Hong Kong, the Hang Seng index added 0.9 percent, to 23,951.16 points, while the Hong Kong China Enterprises Index gained 2.3 percent, to 11,741.78.
The CSI300 and Shanghai indexes both fell 7.7 percent on Monday, their biggest one-day fall since June 2008 after regulators cracked down on credit products blamed for fuelling speculation in the stock market over the past few months.
However, the China Securities Regulatory Commission (CSRC), which punished industry heavyweights for illegal operations in their margin trading, said such market talk it was deliberately muzzling a stock rally “is not consistent with facts”.
Over the past two years, Beijing had steadily relaxed restrictions on margin trading. But on Friday, China’s securities regulator reversed its position, barring three major brokerages from opening new margin trading accounts for clients for three months.
The outstanding value of borrowing for margin trading dropped to 756 billion yuan ($121.64 billion) for the first time on Monday since Dec. 31 2014, data on the Shanghai Stock Exchange website showed. The outstanding value of margin trading borrowing hit a record high last Friday of 771 billion yuan.
China bank shares, which fell nearly 10 percent on Monday, steadied, with the sub-sector index up 0.3 percent. But the financial sector remained weak, with many brokerages continuing their decline.
“Investor sentiment was undoubtedly hurt by the margin trading news despite CSRC saying they did not intend to dampen the stock market,” said Liu Jingde, an analyst at Cinda Securities in Beijing.
“I expect the market to be quite volatile in the near term although over the longer term, it is still a bull market.”
$1 = 6.2151 Chinese yuan renminbi Additional reporting by the Shanghai Newsroom