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China stocks hover near 3-month high as soft data eases policy tightening worries

* SSEC 0.2%, CSI300 0.0%, HSI -0.3%

* HK->Shanghai Connect daily quota used 6.8%, Shanghai->HK daily quota used 0.3%

* FTSE China A50 -0.1%

SHANGHAI, May 27 (Reuters) - China stocks firmed on Thursday, hovering near a three-month high, as subdued industrial data calmed worries over policy tightening, while some positive signs on Sino-U.S. relations further boosted sentiment.

** The CSI300 index was unchanged at 5,322.40 at the end of the morning session, while the Shanghai Composite Index gained 0.2% to 3,599.81, its highest since Feb. 24.

** Analysts and traders said a series of recent soft economic data helped assuage policy tightening fears which had weighed on valuations of equities and risk appetite.

** Data showed earnings at China’s industrial firms grew at a slower pace in April, with high commodity prices and weaker performance in the consumer goods sector limiting overall profitability from manufacturing.

** “Micro liquidity conditions have improved in the A-share market, with the launch of new mutual funds picking up,” said Yan Kaiwen, an analyst with China Fortune Securities.

** Yan added the strong stock rally would further attract more money inflows via the mutual funds in June, forecasting the Shanghai index to test the 3,800-point level this year.

** So far this week, CSI300 gained 3.7%, while SSEC advanced 3.2%.

** Foreign inflows continued to prop up the market thanks in part to a buoyant yuan touching a three-year high.

** Investors purchased a net 8.3 billion yuan ($1.30 billion) worth of A-shares through the Stock Connect linking mainland and Hong Kong, according to Refinitiv data.

** Market participants also kept an eye out on the latest headlines on Sino-U.S. relations.

** China and the United States agreed that the development of bilateral trade is very important, China’s commerce ministry said, adding that both sides exchanged views on issues of mutual concern.

** The Hang Seng index dropped 0.3%, to 29,078.02, while the Hong Kong China Enterprises Index lost 0.4%, to 10,810.55. ($1 = 6.3861 Chinese yuan renminbi) (Reporting by Luoyan Liu and Andrew Galbraith; Editing by Rashmi Aich)

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