CORRECTED-Hong Kong shares up again with cyclicals strong, China

CORRECTED-Hong Kong shares up again with cyclicals strong, China firmer too

Last Updated: Tue, Sep 03, 2013 08:00 hrs

(Corrects to HK stocks on track for fourth-straight gain, not fifth-straight)

* HSI +1.1 pct, H-shares +2.0 pct, CSI300 +0.6 pct

* HSI eyes 5th daily gain, chart resistance could end streak

* Lee & Man Paper jumps, sector consolidation to help

* Sinoma, China National Materials rise after Hazemag deal

By Clement Tan

HONG KONG, Sept 3 (Reuters) - Hong Kong shares appeared on track for a fourth-straight daily gain, as Chinese cyclical counters rose again on Tuesday after favourable China economic data, helping benchmark indexes test chart resistance at August highs.

Official data in the morning showed growth in China's services sector stayed steady in August, adding to signs that government measures have started to boost the world's second-largest economy.

Mainland China markets were also firmer, but stayed in the same range for a fifth session. The CSI300 was up 0.6 percent at the midday trading break and the Shanghai Composite Index ahead 0.5 percent.

The Hang Seng Index climbed 1.1 percent to 22,410.3 points. The China Enterprises Index of the top Chinese listings in Hong Kong gained 2 percent.

Turnover was modest. Both Hong Kong indexes have mostly clawed back a 4.5 percent drop from August highs to lows. If gains hold for the day, the H-share index will close at its highest since late May.

"If the Hong Kong indexes break significantly above these August highs, it could lead to more gains for cyclicals. But with U.S. jobs data due at the end of this week, I don't think there's going to be much conviction," said Jackson Wong, Tanrich Securities' vice-president for equity sales.

"It's not a question of whether the U.S. Federal Reserve will cut quantitative easing, it's a matter of how much and the pace of their reduction," Wong said. "China and Hong Kong may have been comparatively less affected in emerging Asia, but nobody quite knows how much more money could still exit."

The Chinese banking sector led gains on benchmark indexes with mid-sized lenders seeing bigger percentage rises. In Hong Kong, China Construction Bank rose 2.1 percent. China Merchant Bank soared 4.6 percent, but gains came in elevated short-selling interest, accounting for 17 percent of its total turnover at midday.

Zoomlion Heavy Industry shares jumped 4.6 percent in Hong Kong and have now surged nearly 10 percent in three days after closing at a three-week low last Thursday. Its Shenzhen listing shed 0.8 percent.

Chinese railway stocks were also stronger, with China Railway Group and China Railway Construction each up about 4 percent in Hong Kong.

China National Materials shares in Hong Kong surged 6.8 percent after it said its Shanghai-listed unit Sinoma International Engineering bought a majority stake in German mining equipment firm Hazemag & EPR for 104 million euros ($137 million).

Chinese paper maker Lee & Man Paper jumped 8.6 percent on hopes it will benefit from sector consolidation. The official China Securities Journal reported on Tuesday that the country's industry ministry released a second list of 67 companies, mostly paper makers, under its plan to eliminate overcapacity. (Editing by Richard Borsuk)

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