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.