(Updates to close)
* HSI climbs 3.1 pct, up 1.6 pct this week
* CSI300 soars 4.5 pct, up 5.1 pct on the week
* Long funds seen positioning for rally after China
* Chinese infrastructure-related sectors see biggest gains
By Clement Tan and Vikram Subhedar
HONG KONG, Sept 7 (Reuters) - Mainland Chinese shares posted
their best day in eight months on Friday, lifting the Hong Kong
market, on growing signs that Beijing is accelerating spending
to bolster growth.
In Hong Kong, traders said gains came not only from short
covering, but also long-only funds positioning for a rally in
the wake of the China stimulus and reduced Euro zone risks.
Every Hang Seng Index and CSI300 Index
component stock finished in the black on the day.
Markets were also buoyed by the European Central Bank's
decision on Thursday to launch a new and potentially unlimited
bond-buying programme, aimed at cooling painfully high borrowing
costs in some euro zone member countries.
The CSI300 Index of the biggest Shanghai and
Shenzhen listings soared 4.5 percent, while the Shanghai
Composite Index jumped 3.7 percent. Friday's gains were
their best single-day showings since Jan. 17.
The Hang Seng Index firmed 3.1 percent, its best
single-day gain since Dec. 1. The China Enterprises Index
of the top Chinese listings spiked 4 percent.
All four indices also posted their first weekly gain in
four. The CSI300 Index rose 5.1 percent, the Shanghai Composite
gained 3.9 percent, while the Hang Seng Index and the China
Enterprises Index each climbed 1.6 percent.
Gains came in the highest Shanghai volume since March. Even
after excluding placements for AIA Group, Citic
Securities and China Pacific Insurance Company (CPIC)
, Friday's turnover in Hong Kong was 60 percent more
than its 10-day moving average, traders said.
The Chinese machinery, cement and steel sectors were among
the major gainers on news that Beijing had approved a slew of
infrastructure projects this week with an estimated total value
of 1 trillion yuan ($157 billion).
Changsha Zoomlion Heavy Industry
surged the maximum-allowed 10 percent in Shenzhen and 8.1
percent in Hong Kong.
The latest approvals are on top of ones for 24 railway
projects reported by state media on Thursday, and come ahead of
a deluge of data out of China on Sunday that could confirm that
a downswing in the world's second-biggest economy has stretched
into a seventh straight quarter.
"These reports are a good signal that the Chinese government
is prepared to do something, although these projects will take a
few years to complete and won't immediately improve data in the
near term," said Alan Lam, Julius Baer's Greater China equity
"It's still premature to see if this will trigger a rally
from here, although investors should prepare to ride a technical
rebound," Lam added.
BEATEN DOWN CHINESE INDUSTRIALS SEE BIGGEST GAINS
The outperformance of the mainland Chinese markets on Friday
spurred strong gains for proxies for the A-share market. Chinese
insurers and brokerages broadly outperformed in Hong Kong and
Haitong Securities was up 7.5 percent
in Hong Kong and 7 percent in Shanghai. China Life Insurance
gained 3.1 percent in Hong Kong and 5
percent in Shanghai.
But the beleaguered Chinese coal and steel sectors saw the
biggest moves on the day. Yanzhou Coal rose 9.1
percent in Hong Kong, but it is still down more than 32 percent
this year. Angang Steel gained 8.8 percent in Hong
Kong, but it is still down more than 31 percent in 2012.
Chinese excavator maker Sany Heavy Industry
jumped 10 percent in Shanghai, but it remained mired near
two-year lows after the company posted its biggest quarterly
profit decline since 2008 on a jump in unpaid bills.
AIA Group jumped 6.8 percent to HK$28.10. Its
former parent, bailed-out American International Group,
raised about $2 billion after pricing a stake sale at a 0.8
percent premium to its Thursday closing price of HK$26.30.
(Editing by Kim Coghill)