September 7, 2016 / 4:51 AM / 2 years ago

China stocks gain as Beijing flexes fiscal muscles; Hong Kong eases

* SSEC 0.4 pct, CSI300 0.3 pct, HSI -0.3 pct

* Beijing vows to step up proactive fiscal policy efforts

* China environmental stocks jump on policy support

SHANGHAI, Sept 7 (Reuters) - China’s stock markets rose modestly on Wednesday, led by infrastructure and raw materials firms, after Beijing vowed to step up fiscal policy efforts to support the economy.

China’s State Council, or cabinet, also said it would encourage policy banks to extend more credit and reaffirmed the government’s commitment to reducing overcapacity, in a notice published late on Tuesday.

The CSI300 index rose 0.3 percent to 3,352.65 points by the end of the morning session, while the Shanghai Composite Index gained 0.4 percent to 3,101.74.

The infrastructure sector rose 0.9 percent while an index tracking raw material stocks gained 0.7 percent, as investors expect the government to approve more infrastructure projects, boosting demand for goods from cement to steel.

Environment-related stocks, including Zhejiang Weiming Environment Protection and Beijing Capital , also saw a robust rally as China’s policymakers are determined to achieve sustainable development by combating pollution.

Hong Kong stocks dipped after four consecutive sessions of gains.

The Hang Seng index dropped 0.3 percent to 23,722.94, while the Hong Kong China Enterprises Index gained 0.3 percent to 9,969.04.

Hong Kong stocks have been buoyed in recent weeks by expectations that more money will flow into the city’s stock market from mainland China after the Shenzhen and Hong Kong stock markets are linked, possibly as early as November.

Reporting by Samuel Shen, Winni Zhou and John Ruwitch; Editing by Kim Coghill

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