March 3, 2020 / 9:15 AM / in a month

Hong Kong stocks flat as virus worries offset policy hopes

* Hang Seng, H-shares both flat

* G7 policymakers to discuss potential support measures

* Focus on sectors that enjoy policy support - CMB International

SHANGHAI/HONG KONG, March 3 (Reuters) - Hong Kong stocks erased earlier gains to end flat on Tuesday, as worries over the fast-spreading coronavirus offset expectations of global policy support to tackle the economic hit from the epidemic. ** At the close of trade, the Hang Seng index was down 6.86 points, or 0.03%, at 26,284.82. The Hang Seng China Enterprises index was steady at 10,485.16. ** Mainland China reported 125 new cases of coronavirus infections as of Monday, down from 202 cases a day earlier. However, cases outside China continued to rise, posing a greater risk to the global economy. ** The heads of the European Central Bank and the Bank of Japan issued emergency statements on Monday that echoed one from Fed Chair Jerome Powell late last week, with all three looking set to take steps to limit economic damage from the virus. ** Data on Monday showed China’s factory activity contracted at its sharpest pace on record in February, though it is expected to improve somewhat in March as more companies slowly resume production. Nomura estimates only 44% of the hardest hit firms have resumed business as of March 1.] ** G7 finance ministers and central bank governors will hold a conference call on Tuesday morning to discuss measures to deal with the outbreak that is rapidly spreading outside China, a U.S. Treasury spokeswoman said on Monday. ** For the time being, investors should purchase shares in industries which are not that impacted by the virus and benefit from China’s policy support, as the virus outbreak still constitutes a major risk to the global economy, CMB International analysts said in note. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.8%, while Japan’s Nikkei index closed down 1.2%. ** The yuan was quoted at 6.9794 per U.S. dollar at 0818 GMT, 0.3% weaker than the previous close of 6.962. ** At close, China’s A-shares were trading at a premium of 28.4% over Hong Kong-listed H-shares. (Reporting by Luoyan Liu and Noah Sin; Editing by Maju Samuel)

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