UPDATE 1-China invests $470 mln into its banks to boost confidence

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HONG KONG, Oct 12 (Reuters) - China has begun raising itsstakes in major state-owned banks such as Industrial andCommercial Bank of China , seeking to boost investorconfidence in a sector that has been weighed down byexpectations of a spike in bad loans.

Central Huijin, a unit of China's sovereign wealth fundChina Investment Corp , raised its stake in Industrialand Commercial Bank of China by about 127.6 million shares onOct. 9 and 4.7 mln shares on Oct. 10.

Huijin regularly increases its stake in the banks it ownswhen share prices fall, in order to boost investor confidence.

Huijin also bought 421.1 million Agricultural Bank of China

shares on Oct. 9, and an additional 5.7 millionAgBank shares on Oct. 10.

For Bank of China , Huijin bought 273.6 millionshares on Oct. 9 and 3.8 million shares on Oct. 10, while itbought 144.2 million China Construction Bank shareson Oct. 9 and another 2.8 million on Oct. 10. The four banksannounced the purchases in statements to the Hong Kong andShanghai stock exchanges on Friday.

Altogether, this would have cost Huijin about 2.9 billionyuan ($470 million), based on Reuters calculations using thebanks' closing share price in Shanghai on Friday, a tiny portionof the $410 billion that Huijin's parent, CIC, has undermanagement.

"We believe the move shows the government's supportiveattitude towards the domestic A-share market," Barclays analystMay Yan said.

AgBank's Shanghai-listed shares are down about 4 percent sofar this year, roughly in line with the decline of China'sbenchmark Shanghai composite index . ICBC is down about 10percent, CCB down around 9 percent, while Bank of China is down7 percent.

China's insurers have also started helping to boost thestock market. Major insurers such as state-backed China LifeInsurance Co Ltd have increased their combinedstockholdings by more than 10 billion yuan, state media reportedthis week.

(Reporting by Kelvin Soh; Editing by Daniel Magnowski)

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Keywords: BANKS HUIJIN/