* CIS300 +1.0 pct; SSEC +0.9 pct; HSI +1 pct
* Ugly economic data strengthens expectations of policy support
* China shares to outperform Hong Kong peers - analysts
SHANGHAI, March 18 (Reuters) - China stocks rallied for the sixth straight session on Wednesday, powered by cyclical sectors such as steel, highways and property, as weak economic data raised investors’ hopes of fresh stimulus.
Data earlier in the day showed China’s average new home prices fell at the fastest pace on record in February, posing a further risk to the government’s newly minted economic growth target of around 7 percent for this year, which in itself would mark a quarter-century low.
The weak reading following numbers on Tuesday which showed foreign direct investment (FDI) in China grew at its weakest pace in six months.
But real estate stocks jumped, with the Bank of Communications expecting the government will take measures to bolster the market, including lowering taxes and loosening requirements for mortgage lending.
“Over the weekend, Premier Li Keqiang vowed to support the economy if it continues to slide, so the worse the data, the sooner stimulus policies will be rolled out,” said Luo Wenbo, analyst at Qilu Securities.
“Investors wouldn’t have been so bold if the premier hadn’t made that promise.”
The Shanghai Composite Index, which hit the highest level in almost seven years on Tuesday, ended Wednesday morning up 0.9 percent at 3,532.99 points, having firmly stood above the psychological resistance level of 3,400 points. The CSI300 index rose 1.0 percent, to 3,796.20 points.
Hong Kong stocks also rose, with the Hang Seng index up 1.0 percent, to 24,145.14 points.
The index measuring price differences between dual-listed companies in Shanghai and Hong Kong rose to 130.81, touching its highest level in almost two months.
The surge in that index - which points to Chinese stocks now being 30 percent more expensive than their Hong Kong peers - underlines fading links between the two markets, as China is easing monetary policy to bolster growth while Hong Kong may suffer from tighter liquidity as the U.S. Federal Reserve gets closer to raising interest rates.
Analysts expect China’s stock market will continue to outperform, with signs that fresh money is flowing into shares.
Trading volume in the CSI300 index was the highest in more than two months on Tuesday, while the amount of margin financing continues to expand.
Brokerage shares rose on expectation that the bullish market would help boost profit. Investment bank BOC International expects profit at listed brokerages would surge 80 percent on average this year.
Reporting by Samuel Shen and Pete Sweeney; Editing by Kim Coghill