China, Hong Kong stocks extend gains on policy optimism
By Sue-Lin Wong
SHANGHAI Jan 23 (Reuters) - China and Hong Kong shares were firmer by midday on Friday, propped up by rising expectations the Chinese central bank will move to ease liquidity to support the flagging economy.
The European Central Bank's 1 trillion euro rescue plan on Thursday also helped both markets extend gains from a steep fall on Monday, although analysts said that factor had been largely priced in.
A recent batch of weak Chinese economic indicators, including a manufacturing activity survey on Friday, raised the prospect Beijing will roll out more measures.
China's manufacturing growth stalled for the second straight month in January and companies had to cut prices at a faster clip to win new business, the HSBC/Markit Flash Manufacturing Purchasing Managers' Index survey showed.
The CSI300 index rose 1.3 percent, to 3,615.09 points at the end of the morning session while the Shanghai Composite Index gained 1.4 percent, to 3,389.92 points.
The Shanghai index has been notching weekly gains since early November, and is currently up 0.4 percent for the week. The CSI index is down 0.5 percent for the week so far.
"The market has been rising for the past few days and today we are seeing the trend continue among large caps," said Tian Weidong, head of research at Kaiyuan Securities in Xi'an.
"Although the ECB announcement is good news, Chinese investors are cautious leading up to the weekend, particularly after last Friday's crackdown," Tian said, referring to government measures to curb speculative trading. Continuación...