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China stocks extend gains on policy hopes, foreign inflows

* SSEC +0.6%, CSI300 +1.0%

* HK->Shanghai Connect daily quota used 11.4%, Shanghai->HK daily quota used 5%

* Trade war has limited impact on China markets - regulator

SHANGHAI, May 28 (Reuters) - China stocks closed higher for a second straight session on Tuesday, as a top regulatory official downplayed the impact of the trade war with the United States, and as foreign investors bought shares ahead of an increase in MSCI's weighting.

** The blue-chip CSI300 index rose 1.0%, to 3,672.26, while the Shanghai Composite Index closed up 0.6% at 2,909.91.

** The trade war with the United States has had limited impact on China's financial markets and its effects will be "even smaller" in the future, Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said in an interview with state television broadcast on Monday.

** If Sino-U.S. trade tensions deteriorate further, there is a possibility of marginal easing in China's fiscal and monetary policies, as Beijing could take counter-cyclical measures to fully hedge the negative impact and stabilise market expectations, China Galaxy Securities said in report.

** Besides, Beijing is further opening up its financial markets despite the trade war, which market participants expect could bring in more long-term foreign money to prop up its stock market.

** Foreign investors bought more than 7 billion yuan ($1.01 billion) worth of A-shares via the Stock Connect linking Hong Kong and the mainland, reversing an eight-session selling streak through Monday.

** The first phase of MSCI's weighting increase of Chinese mainland shares will take effect after market hours on Tuesday.

* Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.16%, while Japan's Nikkei index closed up 0.37%.

* At 07:14 GMT, the yuan was quoted at 6.9078 per U.S. dollar, 0.15% weaker than the previous close of 6.8974.

** The largest percentage gainers on the main Shanghai Composite index were Gansu Dunhuang Seed Group Co Ltd , up 10.1%, followed by Anhui Liuguo Chemical Co Ltd , gaining 10.1%, and Suzhou New District Hi-Tech Industrial Co Ltd, up by 10.07%.

** The largest percentage losers on the Shanghai index were Qingdao Topscomm Communication Inc, down 6.51%, followed by Kangmei Pharmaceutical Co Ltd, losing 5.06%, and Guizhou Changzheng Tiancheng Holding Co Ltd , down by 5.03%.

** So far this year, the Shanghai stock index is up 16.7% and the CSI300 has risen 22%, while China's H-share index listed in Hong Kong is up 2.7%. Shanghai stocks have declined 5.47% this month.

** About 22.33 billion shares were traded on the Shanghai exchange, roughly 83.0% of the market's 30-day moving average of 26.89 billion shares a day. The volume in the previous trading session was 19.67 billion.

** As of 07:15 GMT, China's A-shares were trading at a premium of 27.13% over the Hong Kong-listed H-shares. ($1 = 6.9064 Chinese yuan) (Reporting by Shanghai Newsroom; Editing by Subhranshu Sahu)