* Trump says China trade deal coming, Beijing calls for resolution of dispute
* China’s July industrial profits swing to growth but outlook clouded
SHANGHAI, Aug 27 (Reuters) - China stocks rallied on Tuesday, bolstered by upbeat industrial profits in July, while possible easing in Sino-U.S. trade tension also aided sentiment.
** The CSI300 index rose 1.8% to 3,834.99 during the morning session, while the Shanghai Composite Index gained 1.7% to 2,911.62.
** U.S. President Donald Trump on Monday predicted a trade deal with China after positive gestures by Beijing, calming global markets that have been roiled by new tariffs from the world’s two largest economies.
** Trump said after a G7 summit of world leaders in Biarritz, France, that he believed China was sincere about wanting to reach a deal, citing what he described as increasing economic pressure on Beijing and job losses there.
** Chinese Vice Premier Liu He, who has been leading the talks with Washington, said on Monday China was willing to resolve the trade dispute through “calm” negotiations and opposed any increase in trade tensions.
** Profits at China’s industrial firms returned to growth in July helped by improvements in the petrochemical and auto sectors but a broader economic slowdown and the protracted U.S. trade war are expected to weigh on the business outlook.
** Investors shall be patient in waiting for further policy support from Beijing with loose monetary policy expected in the second half, Dongxing Securities noted in report, adding there is limited room for the U.S. to further escalate the trade war with China as it faces increased pressure at home.
** The expected inclusion factor of MSCI also helped drive A-share market higher, with net northbound inflows via the Stock Connect linking Hong Kong and mainland reaching 6.4 billion yuan ($902.32 million).
** MSCI is set to raise the inclusion factor for A-shares to 15% from 10% after close on Aug. 27, driving passive net inflow of about $4.5 billion into A-shares, while the pace of active inflow could vary based on domestic and global market changes and numerous macro events such as U.S.-China trade negotiations, UBS analysts wrote in note.
** In Hong Kong, stocks edged up, though gains were pretty much curbed amid worries over the protests.
** The Hang Seng index added 0.1% to 25,707.14, while the Hong Kong China Enterprises Index gained 0.3%, to 10,039.30.
** Hong Kong leader Carrie Lam said on Tuesday the escalation of violence in anti-government protests that have rocked the Asian financial centre for three months is becoming more serious.
** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.42% while Japan’s Nikkei index was up 1.15%.
** The yuan was quoted at 7.1603 per U.S. dollar, 0.12% weaker than the previous close of 7.152.
** The largest percentage gainers on the main Shanghai Composite index were Lifan Industry Group Co Ltd, up 10.06%, followed by North China Pharmaceutical Co Ltd , gaining 10.06% and Shanghai Shenqi Pharmaceutical Investment Management Co Ltd, up by 10.03%.
** The largest percentage losers on the Shanghai index were Jiangsu Xinri E-Vehicle Co Ltd, down 7.44%, followed by Beijing Xinwei Technology Group Co Ltd, losing 4.95% and Ling Yun Industrial Corp Ltd, down by 3.4%.
** The top gainers among H-shares were ANTA Sports Products Ltd, up 7.1%, followed by Country Garden Holdings Co Ltd, gaining 4.62% and China Railway Group Ltd , up by 3.05%.
** The three biggest H-shares percentage decliners were Shenzhou International Group Holdings Ltd, which has fallen 2.82%, Hengan International Group Company Ltd, which has lost 2.6% and PICC Property and Casualty Co Ltd , down by 2.0%.
** As of 04:15 GMT, China’s A-shares were trading at a premium of 29.90% over the Hong Kong-listed H-shares.
($1 = 7.0928 Chinese yuan)
Reporting by Luoyan Liu and John Ruwitch; editing by Uttaresh.V