China Shares Edge Higher, Reclaim 4,000 as Solar Stocks Rise on Tesla Report

SHANGHAI, March 20 (Reuters) - Mainland China shares inched higher on Friday, recouping the psychologically important 4,000-point level, underpinned by gains in photovoltaic stocks following a Reuters' report that Tesla is seeking to purchase solar equipment from Chinese firms.

At the midday break, the benchmark Shanghai Composite index .SSEC was up 0.16%, while the blue-chip CSI300 Index .CSI300 rose nearly 1%.

Photovoltaic shares led the gains, with a sub-index tracking the sector .CSI931151 jumping 4.8%.

The photovoltaic sector saw sharp gains after Tesla TSLA.O was reported to be seeking to buy $2.9 billion worth of equipment from Chinese suppliers, including Suzhou Maxwell Technologies 300751.SZ, for manufacturing solar panels and cells. CEO Elon Musk aims to add 100 gigawatts of solar capacity in the United States.

Meanwhile, China's central bank said it will fully leverage its financial tools to "resolutely safeguard the stable operations of stock, bond, foreign exchange and other financial markets," the People's Bank of China (PBOC) said in a statement published on Thursday.

The war in Iran has sparked worries over inflation risks and roiled global financial markets. Top central banks said on Thursday they stood ready to tackle any surge in inflation with tighter policy, as an escalation in the Iran war put the Middle East's vital energy infrastructure in the line of fire and pushed fuel prices higher.

Earlier in the session, China left its benchmark lending loan prime rates (LPRs) for March unchanged, the 10th consecutive month, in line with market expectations, as surging global oil prices driven by the war cloud the inflation outlook.

"With the Federal Reserve constrained in its easing cycle and the USD remaining firm, the PBOC faces a narrower policy corridor, balancing domestic growth support with FX stability," said Byron Lam, an economist at DBS.

"Rising imported energy costs could further complicate easing, as policymakers weigh growth support against imported inflation risks."

In Hong Kong, the benchmark Hang Seng Index .HSI slipped 0.63%, while the city's tech shares .HSTECH lost 1.7%.