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Hong Kong shares waver after US data as rate concerns resurface

HONG KONG (NewsRise) -- Hong Kong stocks swung between gains and losses as investors weighed improving wage data in the U.S. against the possibility that they may stoke further interest-rate increases. Gains by energy producers were countered by declines for some developers.

The Hang Seng Index rose less than 0.1% to 22,511.88 by the midday break in Hong Kong, hovering near a one-month high. PetroChina rallied 2.5% to HK$6.19 after U.S. crude climbed for a third straight day on Friday. Hang Lung Properties and Wharf Holdings, which paced real estate companies higher last week, slid at least 0.4%. The Shanghai Composite Index added 0.6% to 3,171.87.

U.S. stocks advanced on Friday after the December jobs report showed a further improvement in wages, even as the world's largest economy added fewer jobs than expected. Wall Street equities have broadly outperformed Hong Kong and Chinese markets since Donald Trump's election amid speculation that the president-elect's policies would support U.S. assets and spark outflows from Asia.

"I think that the first round of the Trump-rally, which has seen a preference for U.S. assets, is nearly over," said Ben Kwong, executive director at KGI Asia. "Hong Kong and China markets will benefit from the shift in flows."

Hong Kong and mainland Chinese stocks had climbed last week as mainland authorities stepped up their defense of the yuan to push back against currency bears amid capital outflows. The Chinese currency on Monday fell 0.5% to 6.8819 to a U.S. dollar in Hong Kong, while the version traded onshore slipped 0.2% to 6.9324.

Data released over the weekend showed China's foreign-exchange reserves contracted $41 billion in December, holding just above the psychologically-important level of $3 trillion, amid attempts to support the yuan against further weakness. The reserves have been declining after peaking at near $4 trillion in 2014.

"The PBOC is caught between the devil and the deep blue sea, facing a choice of either continued slow erosion of FX reserves, or further currency adjustment that could be destabilizing for China and may also cause turmoil in Asian currency markets," Rajiv Biswas, Asia-Pacific chief economist for IHS Global Insight, wrote in a report.

ZTE declined 2.2% to HK$12.50 in Hong Kong, after Reuters reported Friday, citing company sources, that the telecom-equipment maker plans to slash 3,000 jobs, about 5% of its workforce.

SAIC Motor climbed 0.5% in Shanghai. A unit of the auto major plans to buy some manufacturing assets of General Motors in India, Reuters reported, citing a filing with India's competition watchdog on Friday.

Geely Automobile Holdings jumped 3.7% to HK$7.96 after issuing a positive profit alert for 2016. The automaker said it expects its annual profits to have more than doubled last year on a sharp rise in sales.

Citic slipped 0.5% by midday, before the Chinese conglomerate and Carlyle Group announced Monday during the Hong Kong trading break that they will buy a majority interest in McDonald's business in Hong Kong and mainland China for $2.08 billion.

-- V. Phani Kumar and Nimesh Vora

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