May 31, 2018 / 7:22 AM / a year ago

China stocks rebound as factory growth data cheers

* Shanghai stocks higher, blue-chip CSI300 index up

* China May factory growth at 8-mth high

* Consumer firms outperform with a 4.5 pct gain

SHANGHAI, May 31 (Reuters) - China stocks rebounded on Thursday, encouraged by strong data that helped ease concerns about an economic slowdown amid trade tensions and as worries over Italy cooled, while MSCI’s inclusion of Chinese shares in its global indexes from Friday also boosted sentiment. ** For the day, the blue-chip CSI300 index rose 2.2 percent to 3,802.38 points, while the Shanghai Composite Index rose 1.8 percent to 3,095.47 points. ** For the month, CSI300 was up 1.3 percent, while SSEC gained 0.4 percent. ** China’s vast manufacturing sector grew at the fastest pace in eight months in May, blowing past expectations and easing concerns about an economic slowdown even as risks from trade tensions with the United States and a crackdown on debt point to a bumpy ride ahead. ** On the whole, however, economists were sceptical of the sustainability of industrial sector strength, suggesting the broader economy will face pressure over coming months. ** “We doubt this strength will be sustained for long given that it appears to mostly reflect a temporary boost to industrial output from the easing of pollution controls rather than a turnaround in underlying demand,” said Julian Evans-Pritchard, Senior China Economist at Capital Economics, in a note after the data release. ** The International Monetary Fund kept its forecast for China’s 2018 economic growth unchanged at 6.6 percent on Wednesday, but warned that overly rapid credit growth and trade frictions could pose risks for the world’s second-largest economy. ** Sentiment was also lifted as political turmoil in Italy showed signs of easing. ** A degree of calm returned, with Italy’s two anti-establishment parties renewing efforts to form a coalition government rather than force Italy into holding elections for the second time this year. ** Sectors rallied across the board on Thursday, led by consumer and healthcare firms, with many of them favoured by foreign investors given their Chinese-specific investing value. ** Industry bellwether Inner Mongolia Yili Industrial surged 10 percent, leading a 4.5 percent rally for the consumer sector. ** However, foreign buying of Chinese stocks was tepid on Thursday as benchmark indexes rose on the last trading day before mainland shares join MSCI’s emerging markets index. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.78 percent while Japan’s Nikkei index closed up 0.83 percent. ** At 07:02 GMT, the yuan was quoted at 6.4025 per U.S. dollar, 0.3 percent firmer than the previous close of 6.4218. (Reporting by Shanghai Newsroom; Editing by Sunil Nair)

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