CORRECTED-China, Hong Kong stocks gain after extension of trade truce deadline

By Summer Zhen

HONG KONG, Aug 12 (Reuters) - China and Hong Kong shares climbed on Tuesday, as the extension of a tariff truce between the U.S. and China, the world's two largest economies, helped cushion investor sentiment.

Washington and Beijing on Monday extended a tariff truce by 90 days in a decision that markets had widely expected.

At the close, the Shanghai Composite index .SSEC rose 0.5% to 3,665.92, extending rally to highest level since Dec 16, 2021. The blue-chip CSI300 index .CSI300 gained 0.52%.

Hong Kong's benchmark Hang Seng .HSI went up 0.25%, while Hang Seng Tech .HSTECH was down 0.38%.

"This is not a surprise to the financial markets. Investors already assumed the deadline would be extended," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

The trade negotiation will take months and investors have shifted their focus to the U.S.-Russia summit, he added.

China markets have been trending higher in recent weeks, as investors priced in positive signals from a series of U.S.-China trade talks, which focussed on bringing tariffs down from triple-digit levels.

China's blue-chip stocks .CSI300 have gained 15% and Hong Kong's Hang Seng .HSI have rebounded more than 20% since early April when U.S. President Donald Trump first announced the duties.

Semiconductors .CSI931865 lifted mainland A-shares on Tuesday, with both Wafer Works (Shanghai) 688584.SS and Cambricon Technologies 688256.SS soaring 20%.

Hong Kong-listed shares of Chinese top foundry Semiconductor Manufacturing International Corp 0981.HK jumped 5% after Bloomberg reported that China urged local firms not to use Nvidia's H20 chips.

Some investors remained cautious on China stocks even as the immediate concerns over tariff had eased.

Ben Bennett, Asia head of investment strategy at L&G Asset Management said they are neutral on Chinese equities.

"We don't think the government will provide significant extra stimulus in the coming months, but would stand ready if the U.S. turns up its tariff pressure," he said.

"It's largely a stalemate situation where the can is being kicked down the road for further trade negotiations," said Moh Siong Sim, a currency strategist at Bank of Singapore.