China stocks extend gains, Hong Kong hits 25-month high

China stocks extended gains on Monday morning, bolstered by strength in heavyweight blue-chips in the material sector that forecast robust mid-year earnings.

The CSI300 index rose 0.5 percent, to 3,740.85 points at the end of the morning session. The Shanghai Composite Index gained 0.6 percent, to 3,272.24 points, its highest in three and half months.

The market had a muted reaction to official figures released on Monday that showed China's July factory growth cooled slightly as export orders eased.

Sector performance was mixed.

Consumer firms and materials led the advance, with the materials index surging 2.3 percent to a nearly three-year high after sector leaders forecast robust mid-year profits. Banking and real estate stocks lagged.

"We continue to recommend consumer, financial and cyclical firms with solid performance and low valuations," Haitong Securities wrote in a report.

The official Purchasing Managers' Index (PMI) stood at 51.4 in July, down from the previous month's 51.7, but still well above the 50-point mark that separates growth from contraction on a monthly basis.

China posted stronger-than-expected economic growth of 6.9 percent in the first half, fuelled by a year-long construction boom, resurgent exports and robust retail sales.

Hong Kong stocks rose in the morning, also supported by strong gains in resource firms.

The Hang Seng index added 0.7 percent, to 27,180.02 points after rising as high as 27,199.47, its highest since June 2015.

The Hong Kong China Enterprises Index gained 0.6 percent, to 10,822.94.

An index of major material firms jumped 3.7 percent, tracking their mainland peers, as those firms are expected to benefit from China's continued supply-side reforms and a weaker dollar.

China Shenhua gained 3.7 percent, after the country's largest coal producer expected a big rise in first-half profits.

Index heavyweight Tencent rose 2 percent to a record high, which helped lift sentiment.

(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)