HK shares snap 2 day slump; China stocks at 10-mnth high

Hong Kong shares rose 4 percent on Wednesday, recouping losses made in the previous two sessions in anticipation of strong China economic data, but Li & Fung trailed on news of customer Arcandor's insolvency.

Chinese stocks rose 1 percent to a 10-month closing high, led by construction-related shares on expectations that economic data for May would show strength in investment and industrial output.

Two Chinese newspapers reported that Beijing was poised to announce the strongest growth in industrial production since last September, well ahead of market forecasts.
Analysts said urban fixed-asset investment in May, due to be announced later this week, was also expected to be upbeat although exports were likely to remain weak.

Meanwhile, price data out earlier on Wednesday was more or less in line with market expectations, with consumer prices easing at a slightly more moderate pace, while producer prices dropped for a sixth month with the rate of decline intensifying.
"There were no surprises in the CPI and PPI, as investors expected. Although the economic recovery may not be particularly smooth or rapid, investor sentiment remains positive," said Western Securities analyst Cao Xuefeng.

HKEX SOARS; LI & FUNG SLIDES IN HK
The benchmark Hang Seng Index closed up 4 percent or 727.17 points at 18,785.66.
Turnover jumped to HK$83.5 billion from Tuesday's HK$71.9 billion.

"Hot money continues to flow into Asian markets but the market is still likely to flounder at the 19,000-point level," said Andrew To, sales director with Taifook Securities.

The main index came within a hair's breadth of 19,000 points last week and has been puching up against the psychologically important level since the beginning of June.

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