China, HK stocks rise as Middle East truce lifts sentiment

SHANGHAI, June 25 (Reuters) - Mainland China and Hong Kong stocks edged higher on Wednesday as global sentiment improved following a ceasefire between Israel and Iran, while some hopes for an earlier-than-expected rate cut from the Federal Reserve also lent support.

** The ceasefire brokered by U.S. President Donald Trump between Iran and Israel appeared to be holding on Wednesday a day after both countries signalled that their air war had ended, at least for now.

** "Tensions between Iran-Israel will be eyed as financial markets remain hopeful that a delicate ceasefire between the two nations would hold," analysts at UOB said in a note.

** By the midday break, the Shanghai Composite index .SSEC was up 0.28% at 3,430.16 points, while the blue-chip CSI300 index .CSI300 rose 0.35% to 3,917.59 points.

** Defence shares led the gains in morning deals, with the sub-index .CSI399973 jumping 3.42%.

** However, falling oil prices after the Middle East truce pressured the energy sector, with shares .CSI000908 falling 2.09%.

** Meanwhile, China's Premier Li Qiang said on Wednesday that he was confident the country could maintain a "relatively rapid growth rate" and transition from an manufacturing-led economy to a consumer-driven one.

** In Hong Kong, the Hang Seng Index .HSI was up 0.77% at 24,362.73 points, while the Hang Seng China Enterprises Index .HSCE rose 0.68% to 8,820.35 points.

** Separately, Fed Chair Jerome Powell said on Tuesday that higher tariffs could begin raising inflation this summer, a period that will be key to the U.S. central bank considering possible interest rate cuts.

** "While Powell reiterated the message that Fed need not rush to cut, he did suggest that the Fed may cut rates sooner rather than later if inflation pressures remain contained," OCBC analysts said in a note. "But he was careful in not committing to a timeline."

** Fed rate cuts could aid Hong Kong stocks as they are closely tied to global monetary policy shifts.