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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 its stakes in major state-owned banks such as Industrial and Commercial Bank of China , seeking to boost investor confidence in a sector that has been weighed down by expectations of a spike in bad loans.

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

Huijin regularly increases its stake in the banks it owns when 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 million AgBank shares on Oct. 10.

For Bank of China , Huijin bought 273.6 million shares on Oct. 9 and 3.8 million shares on Oct. 10, while it bought 144.2 million China Construction Bank shares on Oct. 9 and another 2.8 million on Oct. 10. The four banks announced the purchases in statements to the Hong Kong and Shanghai stock exchanges on Friday.

Altogether, this would have cost Huijin about 2.9 billion yuan ($470 million), based on Reuters calculations using the banks' closing share price in Shanghai on Friday, a tiny portion of the $410 billion that Huijin's parent, CIC, has under management.

"We believe the move shows the government's supportive attitude towards the domestic A-share market," Barclays analyst May Yan said.

AgBank's Shanghai-listed shares are down about 4 percent so far this year, roughly in line with the decline of China's benchmark Shanghai composite index . ICBC is down about 10 percent, CCB down around 9 percent, while Bank of China is down 7 percent.

China's insurers have also started helping to boost the stock market. Major insurers such as state-backed China Life Insurance Co Ltd have increased their combined stockholdings by more than 10 billion yuan, state media reported this week.

(Reporting by Kelvin Soh; Editing by Daniel Magnowski)

((kelvin.soh@thomsonreuters.com)(+852-6113-0928)(Reuters

Messaging: kelvin.soh.reuters.com@reuters.net))

Keywords: BANKS HUIJIN/