China stocks slip on soft factory activity; set for best monthly gain in six

* SSEC -0.2%, CSI300 -0.5%, HSI -0.5%

* HK->Shanghai Connect daily quota used -1.4%, Shanghai->HK daily quota used 1.3%

* FTSE China A50 -1.3%

SHANGHAI, May 28 (Reuters) - China’s major stock indexes slipped on Monday after the country’s factory activity slowed slightly in May, but were on track for best monthly gain in about six months.

** The CSI300 index fell 0.5% to 5,296.53 points at the end of the morning session, while the Shanghai Composite Index lost 0.2% to 3,593.61 points.

** Shenzhen’s start-up board ChiNext added 1.6%, while Shanghai’s tech-focused STAR50 index climbed 3.1%.

** The CSI new energy index rose 3.4%, while the CSI300 transport index and the CSI300 consumer discretionary index fell 1.8% and 1.9%, respectively.

** China’s factory activity slowed slightly in May as raw materials costs grew at their fastest pace in over a decade, weighing on the output of small and export-oriented firms.

** For the month, CSI300 gained 3.4%, its best since Dec 2020, while SSEC firmed 4.3%, its best since Nov 2020.

** Analysts and traders said a recent series of soft data decreased worries over policy tightening, while a stronger yuan helped attract more foreign inflows.

** Investors in the past week purchased a record 46.8 billion yuan ($7.36 billion) worth of A-shares via the Stock Connect linking the mainland and Hong Kong.

** “There is relatively ample liquidity in the market, while China’s economy remains in the recovery stage and has yet to entered into a stagflation stage,” said Fu Yanping, a wealth management strategist at China Galaxy Securities.

** Fu said he did not see a continued rally in the market, adding that investors should pocket gains after indexes hit higher levels as the market would remain range-bound going forward.

** The Hang Seng index dropped 0.5% to 28,978.85 points, while the Hong Kong China Enterprises Index gained 0.1% to 10,799.46. ($1 = 6.3615 Chinese yuan) (Reporting by Luoyan Liu and Andrew Galbraith; Editing by Ramakrishnan M.)