September 18, 2019 / 5:22 AM / 5 months ago

China stocks rise ahead of expected Fed rate cut

SHANGHAI, Sept 18 (Reuters) - China stocks gained on Wednesday on expectations of lower borrowing costs at home and the United States, with improving trade relations between Beijing and Washington aiding risk appetite. Hong Kong shares were little moved.

** China’s blue-chip CSI300 Index gained 0.6% to 3,913.85 points, while the Shanghai Composite Index rose 0.4% to 2,989.75 points.

** In Hong Kong, the benchmark Hang Seng Index was flat at 26,797.53 points. The Hang Seng China Enterprises Index , which tracks mainland companies listed in Hong Kong, edged up 0.1%.

** The U.S. Federal Reserve is widely expected to lower key borrowing costs by 25 basis points on Wednesday. ** Although the People’s Bank of China (PBOC) kept the rate unchanged on one-year loans from its medium-term lending facility (MLF) on Tuesday, analysts still expect banks to set Loan Prime Rates (LPRs) lower at Friday’s monthly fixing.

** A cut in LPRs - China’s benchmark rates for new loans - could lead to lower borrowing costs for consumers and companies in a slowing economy.

** Investors are also closely monitoring development in the U.S.-China trade talks. U.S. and Chinese deputy trade negotiators are due to meet in Washington this week, to the pave way for high-level talks in early October.

** U.S. President Donald Trump said on Tuesday his administration could seal a deal on trade with China before the U.S. presidential election, or an agreement could be reached the day after voters go to the polls.

** Consumer and healthcare stocks lead the gains in China, while technology and energy stocks fell.

** In Hong Kong, a decline on energy shares offset gains in consumer and telecommunication plays. ($1 = 7.0868 Chinese yuan)

Reporting by Samuel Shen and John Ruwitch; Editing by Aditya Soni

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