December 16, 2016 / 5:09 AM / 2 years ago

China, Hong Kong stocks stabilise after sell-off

* SSEC 0.0 pct, CSI300 +0.1 pct, HSI +0.1 pct

* Markets unfazed by fresh curbs from insurance regulator

* Small-caps in China advance 1 percent

* Dollar strength continues to exert pressure on HK shares

SHANGHAI, Dec 16 (Reuters) - China stocks edged up on Friday, stabilising after the previous session’s sell-off in the wake of tighter U.S. monetary policy, with strength in small-cap shares lending support.

The Hong Kong market also rebounded after hitting a four-month low the previous session. But gains were capped after the Federal Reserve’s rate hike and hawkish policy signals on Thursday, potentially luring capital out of emerging markets.

The blue-chip CSI300 index rose 0.1 percent, to 3,342.35 points by the midday break, while the Shanghai Composite Index was unchanged at 3,116.48 points.

Blue chips in China are on track for their biggest weekly fall since January, down more than 4.3 percent so far this week, in part dragged by regulators’ recent moves to curb insurers’ stock investments.

Hong Kong’s Hang Seng index added 0.1 percent, to 22,076.96 points, while the Hong Kong China Enterprises Index gained 0.3 percent, to 9,502.91 points

Hong Kong stocks, which are down around 3 percent this week, are set to post their biggest weekly fall in three months.

Market reaction was muted towards possibly fresh measures from the insurance regulator. The Securities Times reported the regulator is considering lowering the percentage of equity assets allowed on insurers’ balance sheets by 10 percent.

In addition, the regulator issued warnings to 10 insurers after they failed to properly carry out self-inspections on their risk levels, the Securities Daily reported on Friday. Aggressive stake-building by mainland insurers has raised authorities’ concern on possible financial risks.

The markets got some support from small-caps. Shenzhen’s start-up board ChiNext was up more than 1 percent, on signs that some foreign investors were buying small-caps after the index’s recent weakness.

Investors also found some solace from the bond market. China’s 10-treasury futures rebounded nearly 1 percent at the lunch break after Thursday’s panic sell-off in response to the Federal Reserves’ policy tightening.

In Hong Kong, the market was mixed, with gains in service and energy shares cancelled out by losses in telecommunication stocks.

Shares in the city slumped 1.8 percent in the previous session after the Fed flagged more rate-path projections, and a strengthening dollar continued to put pressure on the market.

The dollar index, which measures the greenback’s strength against a basket of major currencies, stood at 103.050, after climbing to 103.560 overnight, the highest in nearly 14 years.

Reporting by Jackie Cai and John Ruwitch; Editing by Jacqueline Wong

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