* HK shares snap 7-day losing streak, banks lead
* Shanghai Comp down 0.2 percent as markets await inflation
data
* Hong Kong developers slip after new round of govt measures
* HK, Shanghai benchmarks near key chart supports
(Updates to midday)
By Vikram Subhedar and Yixin Chen
HONG KONG/SHANGHAI, June 13 (Reuters) – Hong Kong shares
snapped a seven-day losing streak on Monday as banks led a late
rally, setting up the benchmark for a possible bounce from
oversold conditions if inflation data from China on Tuesday
comes in better than expected.
Property developers remained weak, however, capping gains,
after the Hong Kong government on Friday announced more measures
aimed at reining in surging property prices in the territory.
The Hang Seng Index closed up 0.4 percent, recovering
from earlier losses after finding support close to its March low
of 22,123.3 points, a level traders say could provide a floor
for the market.
It had lost more than 5 percent over the previous seven
sessions, with its relative strength index nearing the threshold
mark of 30 which denotes a security is technically oversold.
Turnover remained weak, however, falling to its lowest this
month, as market players resisted from making big bets ahead of
Chinese inflation data.
Analysts expect inflation edged up to 5.4 percent in May,
according to a Reuters poll.
A weaker reading could ease fears of prolonged policy
tightening by Beijing, fears which have dogged Chinese markets
for more than a year, while a higher number could sap investor
confidence further.
China’s annual inflation rate in June may accelerate to more
than 6 percent, which could bring the full-year consumer price
index for 2011 to as high as 5 percent, a government researcher
said in remarks reported on Sunday.
Banking shares, which had seen a steady pickup in
short-selling over uncertainty surrounding local government debt
and capital requirements, rose as low valuations drew in
investors.
Shares of top mortgage lender China Construction Bank
advanced 1.6 percent, providing the biggest boost to
the benchmark. CCB shares trade at a 38 percent discount to
their historical forward 12-month earnings multiple, according
to Thomson Reuters Starmine.
Property shares extended losses, however, keeping the
broader market’s gains in check.
The latest round of Hong Kong government measures could
weigh on developers’ home sales, said Alan Lam, greater China
analyst at Julius Baer.
Hong Kong on Friday unveiled its fourth package of measures
since October 2009 to curb runaway property prices, increasing
the supply of land available to build homes and tightening
mortgage restrictions.
The property sector sub-index fell 0.3 percent.
Industry bellwether Sun Hung Kai Properties Ltd fell
0.7 percent while Sino Land dropped 1.7 percent.
Conglomerate Citic Pacific fell 5.8 percent to its
lowest close this year, bringing its two-day loss to nearly 10
percent over concerns that Australia’s contentious mining tax
will impede its large iron ore operations in the country.
SHANGHAI WEAK, B-SHARE TUMBLE CONTINUES
China’s main stock index ended down 0.2 percent after losing
more than 1 percent in the morning session, but investors
remained wary ahead of Tuesday’s inflation data.
The benchmark Shanghai Composite Index finished down
at 2,700.4 points at a four-and-half-month low, extending a 0.8
percent loss over the week last week.
Analysts said investors expect the central bank to raise
interest rates in the near term due to persistently high
inflation, which will cap gains on the share index.
“The central bank didn’t raise interest rates during the
weekend, so the market continues to be concerned about high
inflation,” said Wen Lijun, an analyst at Nanjing Securities.
But some analysts noted the index managed to climb off early
lows and said it could find support around 2,700 points.
“The index may find support during June. It has less
potential to fall further,” said Zhang Qi, an analyst at Haitong
Securities in Shanghai.
Almost all 14 security houses listed in Shanghai and
Shenzhen fell, while Haitong Securities Co lost 1.5
percent and GF Securities Co dropped 1.4 percent.
China’s main stock index for hard-currency “B-shares”
slumped nearly 5 percent in morning trade but pared losses to
close at 244.1 points, down 2.3 percent.
Foreign share holders sold off on concerns over U.S.
regulators’ warning about the risks surrounding Chinese
companies that have listed there through reverse mergers.
(Editing by Kim Coghill)