February 6, 2017 / 5:23 AM / a year ago

China stocks gains curbed by central bank's tightening; Hong Kong up

* SSEC +0.5 pct, CSI300 +0.4 pct, HSI +0.6 pct

* Mainland SOEs advance on fresh restructuring hopes

* Insurers rebound on bargain-hunting despite weak treasury prices

SHANGHAI, Feb 6 (Reuters) - China stocks rose on Monday morning, with sentiment helped by reported progress in restructuring state-owned enterprises (SOE), but the rebound was curbed by the central bank’s surprise move to raise short-term interest rates late last week.

Despite the tightening there were capital outflows to the Hong Kong share market, putting the index on track to break a four-day losing streak, with gains led by mainland companies. A firmer Wall Street also supported sentiment.

The blue-chip CSI300 index rose 0.4 percent, to 3,377.19 points at the end of the morning session, while the Shanghai Composite Index gained 0.5 percent, to 3,154.78 points.

The tech-heavy start-up board outperformed, adding 1.3 percent by midday and hitting a three-week high.

The Shanghai SOEs Index gained 1 percent by the lunch break, fuelled by reports that ownership reforms at more than 100 Chinese central government-run enterprises would be completed by the end of this year.

But the central bank’s unexpected tightening on Friday kept investors cautious. Pan Shaochang, an analyst at Dongguan Securities, expected liquidity conditions in the stock market to tighten, and foresaw some impact on sectors sensitive to interest rate changes.

Insurance firms, heavily invested in fixed income, rebounded on bargain-hunting despite renewed falls in treasury prices.

Heavyweights China Life Insurance Co Ltd and Ping An Insurance Group Co of China Ltd added 2.3 percent and 1 percent respectively.

There little market reaction to a private survey showing China’s services sector continued to expand in January.

In Hong Kong, the benchmark Hang Seng index added 0.6 percent, to 23,272.88 points, and the Hong Kong China Enterprises Index gained 1.3 percent, to 9,812.52 points.

Banks and telecommunication firms among the best performers in the Honk Kong market.

Sentiment was helped by rising southbound inflows through the Shanghai-Hong Kong Stock Connect, which used over 27 percent of the daily quota in the previous session, compared with an average of nearly 11 percent in January.

Reporting by Jackie Cai and John Ruwitch; Editing by Simon Cameron-Moore

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