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Stocks

China optimism slightly lifts Hong Kong shares

HONG KONG (NewsRise) -- Hong Kong shares rebounded from one-month lows Monday, helped by gains in mainland markets amid hopes for continued fiscal support and neutral monetary policy will spur growth in Asia's largest economy.

The Hang Seng Index rose 0.2% to 23,596.28. Mainland equities outperformed with the Shanghai Composite rising 0.5% and its Shenzhen counterpart advancing 1.2% after the government said it targets economic growth of around 6.5% this year. The money supply (M2) target was set at 12%, higher than the actual 11.3% increase in 2016, but lower than last year's 13% target. Premier Li Keqiang said authorities continue to pursue a prudent and neutral monetary policy.

"2017 is a political year for China. In particular, it makes the slower GDP growth target for 2017 less relevant. We think 6.5% is the slowest acceptable economic growth for 2017," Commonwealth Bank of Australia said in a note. "A 12% growth target for M2 and credit extension, faster than some expected, also sends a signal that monetary policy is to strike balance between steady economic growth and long-term financial stability."

The Hang Seng China Enterprises Index, which tracks the performance of mainland companies listed in the city, rose 0.3%.

Sentiment in the rest of Asia was subdued after Federal Reserve Chair Janet Yellen on Friday was the latest policymaker to voice her support for a rate increase this month if economic data evolved as expected. The Nikkei Asia300 Index was less than 0.1% lower at 1,123.14.

"After failing to sustain over the 24000 level, the index may be in for a bit of consolidation below those levels with the increased possibility of higher interest rates being an overhang," said Andrew Sullivan, managing director of sales trading at Haitong International Securities.

The onshore traded yuan was little changed at 6.8937 against the dollar. The government's annual work report dropped its usual wording of "keeping the yuan stable at an appropriate and balanced level." Commonwealth Bank of Australia said the shift "seems to suggest the Chinese government will take a more market-based approach in managing the yuan exchange rate in 2017."

Tencent Holdings was the biggest contributor to gains on the index by points, rising 1% to HK$209.20.

China Shenhua Energy added 1.6% to HK$16.32 after Premier Li Keqiang said on Sunday that China will cut its coal output by over 150 million tonnes this year.

Sun Hung Kai Properties fell 0.9% to HK$112 as concerns over U.S. interest rate increases led a gauge of property stocks 0.3% lower.

Times Property jumped 3.1% to HK$5.01 after it reported late Friday that February contract sales stood at 1.64 billion yuan ($237.92 million), while Beijing Capital Land rose 1.5% after reporting monthly contract sales of 1.88 billion yuan.

C C Land Holdings shed 1.7% after warning on Friday that it expects to record a loss of about HK$385 million ($49.59 million) in 2016.

Jiangxi Copper rose 0.5% to HK$13.06. The company plans to raise production to maximum capacity, Bloomberg reported, citing Chairman Li Baomin. He said copper prices are poised to drop this year as higher U.S. interest rates and uncertainty about Europe's elections weigh on demand.

Yingde Gases Group, which requested for a trading halt Monday, announced shortly after markets closed that He Yuanping has resigned as the company's chief executive.

--Nimesh Vora

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