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China stocks slip on Sino-U.S. tensions, fresh virus cases; Hong Kong gains

* SSEC -0.2%, CSI300 -0.1%, HSI 0.9%

* HK->Shanghai Connect daily quota used -1%, Shanghai->HK daily quota used 17.5%

* FTSE China A50 -0.2%

SHANGHAI, Jan 11 (Reuters) - China stocks eased on Monday as worries over Sino-U.S. tensions continued to weigh on the market, while a jump in new domestic COVID-19 cases also dampened sentiment.

** The CSI300 index fell 0.1% to 5,492.74 at the end of the morning session, while the Shanghai Composite Index lost 0.2% to 3,561.77.

** The U.S. lifting of restrictions on interactions with Taiwanese officials is a “big thing”, Taiwan Foreign Minister Joseph Wu said, describing it as a major boost for relations with the island’s most important global backer.

** Adding to the pressure, mainland China saw its biggest daily increase in COVID-19 cases in more than five months, the country’s national health authority said, as new infections in Hebei province surrounding Beijing continued to rise.

** Leading declines, the CSI new energy index dropped 3.1%. The index had gained more than 100% in 2020, thanks in part to China’s carbon neutrality pledge.

** Bucking the broad weakness, banking firms rose after data pointing to a continued recovery in the world’s second largest economy.

** China’s factory gate prices fell last month at their slowest pace since February, official data showed on Monday, suggesting China’s manufacturing sector continues to see a steady recovery from the COVID-19 shock.

** Many analysts remained bullish on the market, citing a contiued economic recovery and ample liquidity.

** “A weak dollar and decreased overseas risk would help continued foreign inflows into the A-share market,” Pacific Securities noted in a report.

** Liquidity conditions in China would remain relatively loose at the start of the year, while there is still room for mutual funds to boost equities holdings, the brokerage added.

** The Hang Seng index added 0.9% to 28,122.93, while the Hong Kong China Enterprises Index gained 1.9% to 11,167.23. (Reporting by Luoyan Liu and Andrew Galbraith; Editing by Rashmi Aich)

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