* HK->Shanghai Connect daily quota used 1.9%, Shanghai->HK daily quota used 1.9%
* FTSE China A50 +0.4%
SHANGHAI, Dec 2(Reuters) - China and Hong Kong stocks began the week higher on Monday, buoyed by data showing expansion in factory activity in the world’s second-largest economy in November.
** The CSI300 index rose 0.5% to 3,847.85 at the end of the morning session, while the Shanghai Composite Index gained 0.4% to 2,882.00.
** The Hang Seng index added 0.5% to 26,468.62, while the Hong Kong China Enterprises Index gained 0.8% to 10,378.61.
** China’s factory activity expanded at the quickest pace in almost three years in November, with solid increases in output and new orders, a private business survey showed on Monday.
** That came after official data showed factory activity in China unexpectedly returned to growth in November for the first time in seven months, as domestic demand picked up on Beijing’s accelerated stimulus measures to steady growth.
** “In the short term, we may have already passed the low point where the economy hit the bottom,” Zhang Deli, a macro analyst with Lianxun Securities, wrote in a note.
** Zhang attributed the better-than-expected November PMI to a government push on infrastructure investment, less property market control, and a de-escalation in U.S.-China trade tension in October.
** China’s central bank governor Yi Gang said in a signed article published on Sunday that Beijing should maintain “normal” monetary policy as long as possible since economic growth is still within a reasonable range and inflation is mild overall.
** Eyes were also on the latest developments of Sino-U.S. trade talks.
** Beijing’s top priority in any phase one trade deal with the United States is the removal of existing tariffs on Chinese goods, China’s Global Times newspaper reported on Sunday, amid uncertainty on whether the two sides can end a 17-month trade war that has depressed global growth.
** A trade deal between United States and China was now “stalled because of Hong Kong legislation”, news website Axios reported on Sunday, citing a source close to U.S. President Donald Trump’s negotiating team.
** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.46% while Japan’s Nikkei index was up 1.08%.
** The yuan was quoted at 7.029 per U.S. dollar, 0.04% firmer than the previous close of 7.032.
** So far this year, the Shanghai stock index has gained 15.16%, while China’s H-share index has risen 1.7%. Shanghai stocks have declined 1.95% this month.
** By 0403 GMT, China’s A-shares were trading at a premium of 28.84% over the Hong Kong-listed H-shares. (Reporting by Luoyan Liu and John Ruwitch; editing by Uttaresh.V)