Credit: REUTERS/ALY SONGShanghai shares up 1.4%, blue chips up 1.2%
Premier backs innovation with lower VAT; industrial profits undershoot
Regional banks' shares fall, financing costs rise after Baoshang's rescue
HONG KONG, May 27 (Reuters) - The Chinese stock market climbed on Monday, rebounding from its three-month lows, as investors expected greater policy support to offset impact from U.S. tariffs and cooling domestic demand.
** At the close, the Shanghai Composite index .SSEC was up 1.4% at 2,892.38, while the blue-chip CSI300 index .CSI300 gained 1.2%. Both indexes bounced from their lowest since January 22, hit earlier in the session.
** CSI300's sub-indexes for the financial sector .CSI300FS, the consumer staples sector .CSI000912, and healthcare shares .CSI300HC were all higher by almost 1%, while real estate stocks .CSI000952 climbed 0.9%.
** The smaller Shenzhen index .SZSC ended up 2.5% and the start-up board ChiNext Composite index .CNT was higher by 3.3%.
** Data on Monday showed profits for China's industrial firms dropping in April on slowing demand and manufacturing activity, suggesting the previous month's rebound may have been a one-off and added pressure for policymakers to step up support for a cooling economy.
** Premier Li Keqiang said on Friday China aimed to keep value-added taxes for the manufacturing industry at low levels and encourage companies to innovate, a move that Li said will ultimately help create jobs and maintain sustainable economic growth.
** China's financial regulators said on Friday the country's banking and insurance regulator will take control of Inner Mongolia-based Baoshang Bank [RIC:RIC:BAOTO.UL] due to the serious credit risks it poses, in a rare takeover of a domestic lender. Regional banks' shares fell and their funding costs rose on Monday.
** Policymakers will unlikely let the Shanghai Composite slip below the key level of 2,800, as such a fall could trigger credit risks from pledged-share financing, Citic Securities' analysts wrote in a note on Monday.
** FTSE Russell is forging ahead with plans to add Chinese A shares to its widely-tracked global benchmarks next month despite the trade war. The move will bring at least $10 billion of capital inflows to the local market, analysts at Chuancai Securities wrote in a note on Monday.
** MSCI will implement an increase of A-shares' weighting of its indexes after markets close on Tuesday.
** Around the region, MSCI's Asia ex-Japan stock index .MIAPJ0000PUS was firmer by 0.1%, while Japan's Nikkei index .N225 closed up 0.3%.
** The largest percentage gainers on the main Shanghai Composite index were Shanghai Hongda Mining Co Ltd 600532.SS and Wuxi Taiji Industry Co Ltd 600667.SS, up 10.1%, followed by Sanan Optoelectronics Co Ltd 600703.SS, up by 10%.
** So far this year, the Shanghai stock index is up almost 16% and the CSI300 has risen 20.8%. But, for this month, Shanghai stocks have declined 6%.
** About 19.67 billion shares were traded on the Shanghai exchange. The volume in the previous trading session was 16.72 billion.
** As of 07:21 GMT, China's A-shares were trading at a premium of 26.69% over the Hong Kong-listed H-shares. .HSCAHPI
** The Shanghai stock index is below its 50-day moving average and above its 200-day moving average.
(Reporting by Noah Sin; editing by Uttaresh.V)
((noah.sin@thomsonreuters.com; Reuters Messaging: noah.sin.thomsonreuters.com@reuters.net))
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