Chinese stocks extend rebound but banks lose steam

China stocks rose on Friday, encouraged by strong gains on Wall Street and signs of fresh support from Beijing after a five-day plunge that panicked global markets  Stock Market Trading Tips

But gains in major indexes were tempered by weakness in banks, which reported virtually no profit growth in the first-half and mounting bad loans, adding to worries that the economy may be at risk of a sharper slowdown than earlier expected.

The blue-chip CSI300 index rose 1.5% to 3,254.27 points by midday, paring some of its early gains. The Shanghai Composite Index gained 1.9% to 3,143.02 points.

After a fresh bout of heavy selling early in the week, market sentiment in China appears to be calming down     Indian Stock Market  Astrology Prediction

The central bank cut interest rates and banks' reserve requirements late on Tuesday, and the government has moved to put more money into the market in addition to the billions it mobilised in early summer to avert a full-blown market crash.

Foreign interest in China shares also seems to be slowly reviving after the plunge left valuations more attractive. Money is flowing into the country again via the Shanghai-Hong Kong Connect scheme.

On Friday, respected financial magazine Caixin reported that China's state margin lender has applied for one-year loan from banks worth about 1.4 trillion yuan ($219.03 billion) to fund potential stock purchases.

"If you look at the small trading volume, the rebound could be just technical as confidence is still very weak," said Hou Yinming, strategist at AJ Securities.

"If the rally in blue-chips is sustainable, market excitement could be re-kindled, but such a scenario is not very likely under the current economic environment."

Indeed, banking stocks lost momentum after Thursday's surge, weighed down by lacklustre results.

Most Chinese lenders' shares fell in China and Hong Kong  Himanshu Tiwari Astrologer Blog

In another blow to investor confidence toward blue-chips, PetroChina, China's biggest oil and gas producer, reported a 63% drop in first-half profits.

But PetroChina shares gained on Friday morning, helped by an overnight jump in oil prices.