HK-listed China shares post biggest rise in 7 months
* HSI +2.3 pct, H-shares +3.9 pct, CSI300 +2.9 pct
* Early basket trade of H-share midcaps spurs short covering
* Railway, construction spike on reported govt investment
* ZTE H-shares up 19.5 pct after H1 profit forecast
July 23 (Reuters) - China shares listed in Hong Kong posted their biggest rise in nearly seven months on Tuesday, buoyed by a series of signals that Chinese authorities were working to limit the extent of a slowdown in the world's second-largest economy.
Minutes before the Hong Kong close, Chinese President Xi Jinping reiterated Beijing's commitment to economic reforms, adding credence to an earlier report that Premier Li Keqiang said growth would not be allowed to sink below 7 percent.
Railway and construction material stocks jumped on an official media report Beijing might use high-speed railway projects to help reduce overcapacity in sectors such as cement and steel.
"There's just a lot of news flow on the day and it's giving some people a better idea of what Beijing might do to cope with slowing growth," said Linus Yip, a strategist with First Shanghai Securities in Hong Kong.
The Hang Seng Index climbed 2.3 percent to 21,915.4 points, its highest close in seven weeks. The China Enterprises Index of the top Chinese listings in Hong Kong soared 3.9 percent to record its biggest daily gain since Jan. 2.
The CSI300 of leading Shanghai and Shenzhen A-share listings jumped 2.9 percent, and the Shanghai Composite Index rose 2 percent, their biggest gains since July 11.
Apart from the supportive comments from government officials, sentiment on the mainland was also bolstered by a Shanghai Securities News report suggesting new initial public listings may be further delayed if applicants have to refile corporate financial filings.
TURNOVER PICKS UP
Hong Kong turnover jumped more than 70 percent to $8.6 billion from Monday's $5 billion, which was the lowest so far this year, even as trading interest waned in the afternoon. Shanghai volume spiked more than 30 percent from Monday.
Traders in Hong Kong said a sizeable purchase in a basket of Chinese mid-cap counters helped spur early gains and triggered a bout of short covering.
Still, short interest in Hong Kong accounted for 10.2 percent of turnover, staying above 10 percent as it has for most of the last month and the historical average of 8 percent.
China Railway Construction spiked 7.8 percent in Hong Kong and 7.2 percent in Shanghai. Short selling in its H-share listing had exceeded 10 percent of its turnover in the previous six sessions, peaking at 15.2 percent on Friday.
Shares of Zoomlion Heavy Industries , one of China's largest construction machinery makers, surged 9.2 percent in Hong Kong and a more modest 3.4 percent in Shenzhen. Anhui Conch Cement , China's largest cement producer, rose almost 3 percent in both Hong Kong and Shanghai.
The short squeeze also lifted the Chinese banking sector.
In Hong Kong, Industrial and Commercial Bank of China (ICBC) and China Construction Bank (CCB) each jumped by nearly 5 percent, while smaller lenders Citic Bank spiked 5.7 percent and China Minsheng Bank gained 2.2 percent.
Shares in ZTE Corp , China's second-largest telecommunication equipment maker, surged 19.5 percent in Hong Kong, their biggest jump in almost five years, and its Shenzhen listing jumped by the maximum 10 percent limit after it forecast a first-half profit and said it would issue share options to staff.