* CSI300 +2.5 pct; SSEC +2.2 pct; HSI -3.2 pct
* Investors pile into mainland blue chips, dump small caps
* China unveiled a slew of emergency measures on the weekend
SHANGHAI, July 6 (Reuters) - China’s key stock indexes opened more than 7 percent higher on Monday but ended morning trade less than 3 percent up, as investors used the rebound to dump small caps, casting doubt on how effective fresh market rescue measures will be.
In Hong Kong, stocks slumped over 3 percent amid fears the Greek crisis will deepen.
China’s CSI300 index was up 2.5 percent, to 3,983.83 points at the end of the morning, while the Shanghai Composite Index gained 2.2 percent, to 3,766.37 points.
But the banking index was still up 7 percent by midday, near where it was right after market opening, as investors piled into financial heavyweights after mutual funds, brokerages and state-backed investor Central Huijin all vowed to buy blue chips, or exchange-traded funds (ETFs) tracking blue chip indexes.
China’s biggest lenders, including Bank of China , Agricultural Bank of China and ICBC all surged more than 8 percent.
In contrast, China’s growth board ChiNext opened over 6 percent higher, but then slumped to be down 3.8 percent by the lunch break as investors unwound positions in small caps.
Hong Hao, chief strategist of BOCOM International, said it’s still too early to judge whether government emergency measures announce over the weekend would work to stabilize the market.
Over past two days, Beijing orchestrated a halt to initial public offerings, major brokers and fund managers collectively pledged to invest at least $19 billion of their own money in stocks, and the central bank vowed to give liquidity support to China’s state-owned margin finance company.
“Whether the blue chips will calm the small caps, or the small caps will continue to unsettle the rest of the market remains to be seen,” Hong wrote on Monday.
“Buying anything expensive outside the blue chips will be tantamount to throwing good public money after bad, and should not be celebrated.”
Chen Jiahe, an analyst at Cinda Securities, said investors were taking a hint from government support measures and shifting money into blue chips.
“Blue chips are still relatively cheap. The era of blue chips has come.”
The Shenzhen market, which hosts China’s smaller companies, reversed early gains and ended the morning lower.
The Shenzhen Composite fell 2.6 percent and the SME Composite lost 2.5 percent.
“The government measures are only aimed at stabilizing the market, and providing an exit for those who want to get out,” said Liu Li, analyst at Shanxi Securities Co.
“You cannot expect the government to use public money to buy shares which are expensive, such as small caps.”
In Hong Kong, the Hang Seng index dropped 3.2 percent, to 25,234.75 points, while the Hong Kong China Enterprises Index lost 3.3 percent, to 12,191.32. (Reported by Samuel Shen and Pete Sweeney; Editing by Richard Borsuk)