* HK->Shanghai Connect daily quota used 4.6%, Shanghai->HK daily quota used 3.7%
* FTSE China A50 +1.1%
SHANGHAI, Dec 27 (Reuters) - China and Hong Kong stocks rose on Friday as a rebound in November industrial profits and easing trade tensions between Beijing and Washington whetted risk appetite.
** The CSI300 index rose 0.9%, to 4,063.55, by the end of the morning session, while the Shanghai Composite Index gained 0.9%, to 3,032.81.
** Both indexes were on track for their fourth straight weekly gain.
** Profits at industrial firms in November grew at the fastest pace in eight months, breaking a three-month declining streak, as production and sales quickened, but broad weakness in domestic demand remains a risk for earnings next year.
** If policy easing or economic recovery beats market expectations, financial and real estate stocks could lead a further rally in the market, Yuekai Securities said in a report.
** Chances are small that the A-share market would trend lower for now, as the environment is quite strong in terms of policies, earnings and liquidity conditions, the brokerage added.
** Investors were also encouraged by signs that Beijing may unveil more stimulative measures to boost the world’s second-largest economy.
** China may allow local governments to issue about 10% more special bonds in 2020 to help support economic growth, a senior government economist said on Thursday, a smaller increase than some analysts had been expecting.
** On Thursday, state media reported China plans trillions of yuan in major infrastructure investments in 2020.
** China said it was in close contact with the United States on signing a Phase 1 trade deal, and that both sides were still going through necessary procedures before the signing.
** In Hong Kong, the benchmark Hang Seng index hit a five-month high.
** The Hang Seng index climbed 1.2%, to 28,193.40, while the Hong Kong China Enterprises Index gained 1.3%, to 11,183.61.
** Reuters reported China had called on its biggest state firms to take a more active role in Hong Kong, including stepping up investment and asserting more control of companies in the financial hub.
** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.75%, while Japan’s Nikkei index was down 0.03%.
** The yuan was quoted at 6.9994 per U.S. dollar, 0.02% weaker than the previous close of 6.998. ($1 = 6.9988 Chinese yuan) (Reporting by Luoyan Liu and Brenda Goh; Editing by Subhranshu Sahu)