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China stocks rise on stimulus hopes, trade anxiety curbs gains

China stocks ended higher on Tuesday, as a dim services sector survey reinforced hopes that Beijing will roll out more stimulus measures, though uncertainties around Sino-US trade talks curbed gains.

The country’s markets on Tuesday re-opened after a week-long holiday.

The blue-chip CSI300 index rose 0.6 per cent to close at 3,837.68, while the Shanghai Composite Index added 0.3 per cent to end at 2,913.57.

China’s services sector grew at its slowest pace in seven months in September despite a strong increase in new orders, as operating expenses continued to rise at the end of the third quarter, a private survey showed.

Services account for more than half of China’s economy, providing a key buffer, as persistent trade tensions with the United States weigh heavily on the country’s manufacturing sector.

“We continue to be optimistic about the A-share market in the fourth quarter, as there is still room for policy boost which would further lift risk appetite,” Orient Securities said in a report.

Also, hopes that corporate earnings are expected to bottom out in the third quarter have increased, which could provide fundamental support to stocks, the brokerage added.

Robust consumer spending during the “Golden Week” also aided sentiment, sending consumer shares higher.

Spending on retail goods and dining during the week-long National Day holidays returned to growth this year, offering unexpected respite to an economy that has been expanding at its weakest pace in almost three decades.

However, the uncertainty around developments in Sino-US trade talks kept overall gains in check.

Prospects for progress in US-China trade talks dimmed on Monday after Washington blacklisted Chinese companies over Beijing’s treatment of predominantly Muslim ethnic minorities, and President Donald Trump said a quick trade deal was unlikely.

Trump and his top economic adviser, Larry Kudlow, spoke in generally upbeat terms about this week’s discussions with China, the first such high-level talks in more than two months, but Trump insisted he would not be satisfied with a partial deal.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.73 per cent, while Japan’s Nikkei index closed up 0.99 per cent.

At 07:14 GMT, the yuan was quoted at 7.122 per US dollar, 0.36 per cent firmer than the previous close of 7.148.

The largest percentage gainers on the main Shanghai Composite index were Henan Yinge Industrial Investment Co Ltd , up 10.2 per cent, followed by Hunan Fangsheng Pharmaceutical Co Ltd, gaining 10.03 per cent, and Nanjing Huamai Technology Co Ltd, up by 10.01 per cent.

The largest percentage losers on the Shanghai index were Shanghai Film Co Ltd down 10.01 per cent, followed by WPG (Shanghai) Smart Water Public Co Ltd losing 10.01 per cent and Qingdao Richen Food Co Ltd down by 10 per cent.

As of 07:15 GMT, China’s A-shares were trading at a premium of 29.54 per cent over the Hong Kong-listed H-shares.