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Stocks

Hong Kong shares at 21-month high as China companies bounce back

HONG KONG (Nikkei Markets) -- Hong Kong shares forged their way back to 21-month highs Tuesday, inspired by a rally in mainland companies that saw Shanghai equities snap a five-day losing streak.

The Hang Seng Index rose 1.3% to 24,889.03, closing at its highest level since July 2015. The index briefly turned negative in the morning session when mainland markets slid to seven-month lows.

A gauge of mainland companies listed in Hong Kong, which had fallen to three-month lows last week, rose 1.5%. Huaneng Power International was the top performer on the H-share gauge, rallying 6.7% as power companies advanced after a Bloomberg report that China is considering orchestrating industry consolidation into three large entities. Datang International Power Generation surged 16% and China Resources Power Holdings added 5.5%.

The Shanghai Composite ended almost 0.1% higher on Tuesday after falling as much as 0.7% earlier, while the Shenzhen benchmark rose 0.7%. Concerns that measures to safeguard financial markets will lead to tighter liquidity and hurt demand for equities had driven Chinese equity markets lower in recent sessions.

"The market was a bit indecisive in the morning as it was looking like another difficult day for China markets," said Louis Tse, asset management director at Hong Kong-based VC Brokerage. "But once we saw a recovery in mainland markets, buying picked up. If China stabilizes, that should help the flows into Hong Kong."

Mainland investors transacted HK$6.4 billion ($822.2 million) of local stocks Tuesday via the Shanghai and Shenzhen exchange links.

The Nikkei Asia300 Index was 0.6% higher, as eased fears of political uncertainty in Europe whetted investor appetite.

China Life Insurance rose 2.6% and Ping An Insurance Group added 1.7% after Chinese 10-year government bond yields climbed to levels last seen in July 2015.

Hong Kong Exchanges & Clearing advanced 2.5%. The bourse operator's London Metal Exchange unit will launch spot and futures trading in gold and silver on July 10, South China Morning Post reported.

China Petroleum & Chemical (Sinopec) climbed 2.5% as crude prices were poised for a third day of rises amid hopes OPEC-led production cuts will be extended until the end of the year. CNOOC and PetroChina each rose at least 0.9%.

Sun Hung Kai Properties added 0.9%. The developer has launched leasing of shop spaces at a new 1.1-million square-foot mall that it will open in July in the Yuen Long area of Hong Kong, The Standard newspaper reported.

U.S.-listed Chinese e-commerce company JD.com surged 7.7% on Monday after it recorded its first quarterly profit following a jump in revenues.

Kingsoft rose 3.8% in Hong Kong on Tuesday after saying it has applied for a unit's listing on Shenzhen Stock Exchange's ChiNext index of small companies.

On Time Logistics Holdings hit a lifetime high of HK$4.21 during the session after Chinese logistics company YTO Express Group made an offer to buy a controlling stake in the company at HK$4.07 a share. The stock reversed course to end 1.6% lower at HK$3.81. On Time shares are still up 27% so far this year. YTO Express shares rose 5.6% in Shanghai.

On Time Logistics Holdings hit a lifetime high during the session after Chinese logistics company YTO Express Group offered to buy a controlling stake in the company for HK$1.04 billion. The stock then reversed course to end 1.6% lower. On Time shares are still up 27% so far this year. YTO Express shares rose 5.6% in Shanghai.

China Galaxy Securities rose 1.5% after reporting an 18% increase in net profit for last month.

--Nimesh Vora and V. Phani Kumar

--Nikkei Markets is a real-time financial news service for South East Asia's markets published by Nikkei NewsRise Asia Pte Ltd, a Nikkei and NewsRise joint venture company. Nikkei Markets provides wide companies coverage in the region, including the Nikkei's Asia300 companies.

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