July 5, 2016 / 5:06 AM / 2 years ago

China shares rise as service sector picks up, Hong Kong falls

* CSI300 +0.03 pct; SSEC +0.4 pct; HSI -0.8 pct

* Strength of China services sector aids sentiment

* Money flows into commodities on risk aversion

HONG KONG, July 5 (Reuters) - Stocks in China rose on Tuesday on further signs that growth in the country’s services sector is speeding up, and as investors bought shares which are expected to benefit from reforms.

The mainland’s blue-chip CSI300 index was up 0.03 percent at 3,205.70 points by the lunch break, while the Shanghai Composite Index gained 0.4 percent to 3,000.66.

“The sectors related to SOE (state owned enterprises) reforms and military equipment have led the rally in A shares,” said Tian Weidong, head of research at Kaiyuan Securities in Shaanxi.

Activity in China’s services sector rose to an 11-month high in June, a private survey showed on Tuesday, diverging from struggling manufacturing in a trend that if sustainable would indicate Beijing is making progress in rebalancing the economy.

Analysts said overall sentiment was positive, buoyed by ample liquidity in the system and expectations that authorities will roll out further economic stimulus measures.

The central bank had said on Monday that it would use various policy tools to maintain appropriate liquidity and reasonable growth in credit and social financing.

Sector performance was mixed with consumer stocks gaining 0.9 percent, while resources, banks and healthcare slid.

In Hong Kong, the blue chip Hang Seng Index fell 0.8 percent to 20,885.84, while the Chinese enterprises index slid 1.03 percent as investors took profits after recent strength.

Reporting by Michelle Chen and Donny Kwok in Hong Kong; Additional reporting by Qiu Yifan in Shanghai; Editing by Kim Coghill

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