By Unknown User
* Hong Kong rises 1.8 pct; Shanghai up 0.9 pct
* Oil, metals and other commodities recover
* Retail investors back buying China stocks
(Updates to close)
By Jun Ebias and Farah Master
HONG KONG, Nov 18 (Reuters) - Shares in Hong Kong and Shanghai rebounded from multi-week lows on thin volumes on Thursday, as investors scooped up beaten down shares such as oil, metals and other commodities.
But traders and analysts said Thursday's rebound could be short-lived as worries persisted that China may adopt more stringent measures to stem accelerating inflation, including a drastic rise in key interest rates.
"The upward momentum remains weak and today's rise is just a technical rebound," said Louis Wong, research head at Philip Securities in Hong Kong.
"Investors are wary about the measures that will be taken by Beijing to curb price rises. There are talks of a hefty rate increase of as much as 75 basis points."
The Chinese government vowed on Wednesday to intervene should inflation continue to accelerate, hinting of harsher measures ahead that could stifle growth. [ID:nSGE6AH00A]
The benchmark Hang Seng Index ended up 1.8 percent at 23,637.39, snapping four straight days of losses that brought the market to near oversold territory.
The key index lost 6 percent in the last four sessions and ended at a near three-week low on Wednesday.
Metals and oil recovered after prices of these commodities rebounded on a weak U.S. dollar. Jiangxi Copper was up 5.3 percent, gold miner Zijin Mining gained 6.5 percent and oil firm CNOOC Ltd increased 4.9 percent.
Outperforming the market, China Qinfa Group Ltd , rose 10.7 percent after the Chinese coal trader said it would buy a 32 percent stake in chemical products retailer Huameiao Energy, helping the firm secure more coal from Shanxi Province.
Turnover slid to HK$92 billion ($11.9 billion), the lowest in almost three weeks, from HK$103 billion on Wednesday.
CHINA REBOUNDS, BUT TURNOVER SLIPS
China's key stock index closed up 0.94 percent in a mild technical rebound.
Speculative retail investors, who make up two-thirds of turnover, started buying back into the Shanghai market, which lost about 11 percent in the slide from last Friday to Wednesday, but volume remained thin.
China's moves to tighten monetary policy in the face of escalating inflationary pressure spooked investors, prompting them to sell off large caps over the past week.
The Shanghai Composite Index ended at 2,865.45, edging closer to the 250-day moving average, now at 2,890, a closely watched level in the domestic market. The index dropped 1.9 percent on Wednesday to a one-month low.
Analysts cautioned that rumours of further monetary policy tightening in China may cause jittery retail investors to act in a herd-like manner, pushing the market down.
The 14-day RSI was at 42, still in a normal range. A reading of 30 indicates the benchmark index is technically oversold and may see short-term gains. A 70 mark indicates overbought.
"The falls were led by a lot of rumours. Investors don't have any sense of whether rumours of an interest rate rise, or a rise in reserve requirements are true, but panic sets in and then there's no option but to sell," said Ren Chengde, analyst at Galaxy Securities in Shanghai.
A weaker dollar gave finicky investors an opportunity to buy into heavily weighted resources issues such as oil giant China Petroleum & Chemical Corp (Sinopec) , which gained 1.3 percent.
Datong Coal Industry Co Ltd was up 7.7 percent, while Zijin Mining Group Co Ltd rose 5.9 percent.
"Chinese investors don't use good reasoning; they don't completely follow real investor logic. Their perception is easily influenced," Ren said.
Analysts said commodities issues would remain attractive in the short term as long as the dollar remained weak.
SAIC Motor Corp Ltd outperformed the broader market, gaining 4.9 percent. The Chinese car maker is still deciding whether to participate in General Motors Co's increased initial public offering. [ID:nTOE6AH00G]
China Everbright Bank Co Ltd slumped 3.7 percent as 1.55 billion institutional shares in the lender were converted into free float on Thursday after a lock-up period.
Volume dropped further from Wednesday's lacklustre performance. Turnover of Shanghai A shares slumped to 127.2 billion yuan ($19.15 billion) from 157.9 billion on Wednesday.
(Editing by Sugita Katyal)
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