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Nikkei Markets

Hong Kong shares edge up as US rate-cut hopes linger

Chinese airlines gain after reporting June operational data

HONG KONG (Nikkei Markets) -- Hong Kong shares edged higher after a choppy morning session on Tuesday, as hopes for a rate cut in the U.S. and broadly positive Chinese economic data helped sentiment.

The Hang Seng Index added 0.1% to 28,592.44 by noon after slipping as low as 28,489.41 earlier. Heavyweights Tencent Holdings and China Mobile climbed 0.7% and 0.6%, respectively. Casino operators Galaxy Entertainment Group and Sands China rose 2.7% and 2.6%, respectively, amid optimism for growth in gaming revenue during the summer months.

U.S. equity indexes closed at fresh record highs on Monday amid ongoing expectations the Federal Reserve will cut interest rates at its policy review on July 30 and 31.

Optimism also lingered after a clutch of Chinese economic data releases lifted Hong Kong and mainland shares on Monday. Retail sales and industrial production numbers for June came in better than expected, while China's second-quarter gross domestic product print met expectations. Still, some analysts continue to expect policy support from the People's Bank of China as a long drawn out Sino-American trade war weighs on outlook for economic growth in the country.

"Participants are still in observation mode and would rather wait for one or two more months of data to confirm economic recovery," said Stanley Chan, director of research at Emperor Securities, drawing attention to low turnover on the city's stock exchange despite apparent stability in the market.

Turnover on the stock exchange's main board was at 36.98 billion Hong Kong dollars ($4.72 billion) by the midday break, weaker than usual for the time of day.

Meanwhile, U.S. Treasury Secretary Steven Mnuchin on Monday said he and Trade Representative Robert Lighthizer may travel to Beijing for trade negotiations if talks by phone this week are productive.

"There is no meaningful change in the U.S. stance and investors are not expecting much from the call," Chan said.

In the mainland, the Shanghai Composite Index edged 0.1% lower after rising 0.4% on Monday.

China Eastern Airlines rose 1.6% after reporting an 8.4% increase in passengers carried during June.

China Southern Airlines climbed 2.7% following a 9.3% jump in the passengers it carried last month.

Air China, which reported a 2.7% rise in passengers carried for June, edged up 1%.

Bonjour Holdings slipped 2.8% after the Hong Kong-based cosmetics retailer said it expects to report a loss for the six months ended in June. The company cited weak sales performance amid the ongoing U.S.-China trade war, depreciation of the Chinese yuan and recent political unrest in Hong Kong.

Giordano International slumped 9.1% after the apparel distributor said it expects profit for the six months ending in June to fall about 38% from a year ago.

Mobile advertising services company Mobvista advanced 1.8% after saying its board will meet on July 25 to consider the declaration of a special dividend.

-- Amy Lam

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