Meanwhile, investors continued to digest Moody's downgrade of midsize US banks, a reminder that the problems that roiled the financial world in the spring are not yet in the past. It's another sign that Beijing is struggling to revive demand in the world's second-biggest economy, spurring fears about a prolonged slowdown with global repercussions. With the crucial July US inflation report looming on Thursday, data released Wednesday showed China's consumer sector fell into deflation in July. The S&P 500 ( ^GSPC) slipped 0.7%, while the tech-heavy Nasdaq Composite ( ^IXIC) led the way down, 1.17%. The Dow Jones Industrial Average ( ^DJI) fell 0.54%, or 190 points. ** In Hong Kong, the top gainer on the Hang Seng was Sunny Optical Technology Group Co Ltd, up 5.9 percent, while the biggest loser was China Mobile Ltd, which was down 1.1 percent.Stocks sputtered on Wednesday, as worries lingered on the US banking sector and attention shifted to a key US inflation report in the wake of disappointing Chinese price data. ** The Shanghai stock index is above its 50-day moving average and below its 200-day moving average. ** At midday, China’s A-shares were trading at a premium of 16.67 percent over the Hong Kong-listed H-shares. ** The largest percentage gainers in the main Shanghai Composite index were Beijing Bashi Media Co Ltd, Lanzhou Greatwall Electircal Co Ltd and Shanghai Diesel Engine Co Ltd, all up by 10 percent. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.1 percent while Japan’s Nikkei index was up 1.2 percent. ** Any escalation in the U.S.-China trade war would exacerbate a global economic downturn, which is already underway, according to a Reuters poll. Commerce Secretary Wilbur Ross said on Thursday that the two sides are still “miles and miles” from a deal, while Treasury Secretary Steven Mnuchin said Beijing and Washington are “making a lot of progress”. Mixed messages came out of the White House ahead of his trip. trade negotiations, and up until this point, developments are largely positive.” ** Chinese Vice Premier Liu He is due to visit the United States at the end of this month. But whether the index can stay there “depends also on progress in the Sino-U.S. ** Analyst at Essence Securities said in a note prior to the open that the Hang Seng will breach its December high of 27,260 points, with Tencent in the lead. Information Technology stocks rose 2.9 percent. ** Shares in the city were boosted by market leader Tencent Holding Ltd, which rose as much as 3 percent, after winning regulatory approvals for two mobile phone games. The benchmark Hang Seng Index climbed 1.3 percent to 27,483.98 points, up 1.5 percent for the week as of midday. ** In Hong Kong, Chinese H-shares rose 1.5 percent. Their “low valuation, high return-on-equity and regular dividends provide good investment value.” ** CSI’s index tracking banks hit a seven-week high in morning trade, and was up 1.5 percent at midday, while the CSI300’s financial sector sub-index was 1.3 percent higher. ** The move will make banks’ shares more attractive, “particularly for absolute-return and long-term investors,” Xiao Feifei, chief analyst for banks at Citic Securities, said in a note on Friday. ** China will allow insurance institutions to invest in tier-2 capital bonds and perpetual bonds issued by banks, and set up a central bank bills swap to improve the liquidity of banks’ perpetual bonds, policymakers said on Thursday. ** The smaller Shenzhen index was up 0.4 percent and the start-up board ChiNext Composite index gained 0.4 percent. ** China’s blue-chip CSI300 index rose 0.9 percent, with its consumer staples sector climbing 0.6 percent, the healthcare sub-index rising 0.2 percent, and energy companies advancing 0.4 percent. ** At the midday break, the Shanghai Composite index was up 0.6 percent at 2,606.58 points, up 0.4 percent for the week as of midday. HONG KONG, Jan 25 (Reuters) - Stocks in Mainland China and Hong Kong rose on Friday after regulators announced new measures to beef up Chinese banks’ capital strengths, as economic growth cools at home and abroad. * Tencent leads gains in Hong Kong after game approvals * China moves to shore up banks’ capital financials rise
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