* Central banks set to take steps to limit the economic damage
* New virus cases further declined in mainland China
SHANGHAI/HONG KONG, March 3 (Reuters) - China and Hong Kong stocks rose on Tuesday as new coronavirus cases within the country dropped sharply, and on expectations of global policy support to tackle the economic hit from the epidemic. ** At the midday break, the Shanghai Composite index was up 1.4% at 3,011.37 points, while China’s blue-chip CSI300 index was up 1.3%. Both indexes jumped more than 3% on Monday. ** Chinese H-shares listed in Hong Kong rose 0.9% to 10,575.75, while the Hang Seng Index was up 0.8% at 26,495.93. ** Mainland China had 125 new confirmed cases of coronavirus infections on Monday, the National Health Commission said on Tuesday, down from 202 cases a day earlier and the lowest since the authority started publishing nationwide data in January.
** However, data on Monday showed China’s factory activity contracted at its sharpest pace on record in February, raising the prospect of policy support from global central banks.
** The heads of the European Central Bank and Bank of Japan issued emergency statements on Monday that echoed one from U.S. Federal Reserve Chair Jerome Powell late last week, with all three looking set to take steps to limit economic damage from the epidemic.
** Loosening global liquidity conditions could have a spillover effect in China, while Beijing’s macro policies to hedge the virus hit could also stay at a high level as the resumption of production in the country remains partial, Bohai Securities said in note.
** In China, policymakers have already implemented a raft of measures to support the economy as the epidemic is expected to have a devastating impact on first-quarter growth.
** 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. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.5%, while Japan’s Nikkei index was up 0.2%. ** The yuan was quoted at 6.9702 per U.S. dollar, 0.1% weaker than its previous close of 6.962. ** As of 0403 GMT, China’s A-shares were trading at a premium of 28.2% over the Hong Kong-listed H-shares.
Reporting by Luoyan Liu and Noah Sin; Editing by Devika Syamnath