China stocks edge higher on Apple supplier rally, Xi-Trump call

By Jiaxing Li

HONG KONG, Sept 22 (Reuters) - Chinese stocks inched higher in choppy trading on Monday, led by a rally in Apple suppliers, while investors digested positive signals from high-level U.S.-China talks.

** By the midday break, the Shanghai Composite index .SSEC climbed 0.07% to 3,822.59 after swinging between gains and losses in morning trade. The blue-chip CSI300 index .CSI300 also rose 0.07%.

** U.S. President Donald Trump said he and Chinese President Xi Jinping made progress on a TikTok agreement and would meet face-to-face in six weeks in South Korea to discuss trade, illicit drugs and Russia's war in Ukraine.

** "These developments suggest US-China headlines are likely to stay stable or improve over the next few months," Goldman Sachs said in a note.

** Lifting markets higher on Monday, the electronics sector .CSI930652 rose 3.3% and the info tech sector .CSIINT gained 3%, as Apple AAPL.O suppliers rallied on news that OpenAI had signed a deal with Luxshare 002475.SZ to make a consumer device.

** Luxshare 002475.SZ surged to the daily trading limit of 10%, while peer Goretek 002241.SZ and Foxconn 601138.SS jumped 7.7% and 8.2%, respectively.

** Financial stocks continued to weigh on the broader market. The banking sector .CSI399986 lost 0.5% after a 4.2% drop last week, while the insurance sector .CSI399809 was down 0.1%.

** The recent weakness in financial sectors has poured some cold water on the recent market rally, leading to divergent views about the market direction ahead, analysts at Guotai Haitong said in a note.

** Still, the consolidation should set the markets up for further upside with geopolitical risk abating following the Xi-Trump call and liquidity conditions improving on Fed rate cuts, they said.

** In Hong Kong, the Hang Seng Index .HSI was down 1% at 26,280.72. The tech sector .HSTECH weakened 1.2%.

** China kept its benchmark lending rates unchanged for the fourth consecutive month in September, in line with market expectations, following the central bank's decision to hold a main policy rate steady last week.