(Reuters) - China's major stock indexes gained on Friday, led by consumer stocks after data showed a surprising rise in retail sales, and as dismal economic growth in the second quarter raised expectations of more stimulus.
The CSI300 index rose 0.4% to 4,339.74 points at 2:36 GMT, while the Shanghai Composite index gained 0.2% to 3,286.85 points.
Consumer staples gained 1.4% and consumer discretionary stocks added 2% after data showed retail sales rose 3.1% following the easing of COVID-19 restrictions last month. Analysts had expected a 0% increase after May's 6.7% drop.
"The retail sales data is better than expectations, and I think the economy is on track for a recovery," said Linus Yip, chief strategist at First Shanghai Group.
"Nonetheless, economic growth is still much lower than its potential, as the fear of COVID outbreaks continues to hurt consumer and corporate sentiment," said Zhiwei Zhang, Chief Economist at Pinpoint Asset Management.
Gross domestic product (GDP) rose 0.4% year-on-year in the second quarter, missing expectations, official data showed, as widespread lockdowns to curb record COVID cases hit industrial activity and consumer spending.
"Given the tame growth, China's government is likely to deploy economic stimulus measures from now on to rev up its flagging growth," said Toru Nishihama, Chief Economist at Dai-ichi Life Research Institute in Tokyo.
Gains in markets were capped by losses among real estate developers and banks.
In recent weeks, growing numbers of homebuyers have threatened to halt mortgage payments until developers resume construction of pre-sold homes, according to official and social media.
That would threaten to kill a nascent recovery in China's capital-starved property sector and hit banks with hefty writedowns, analysts warned.
However, state media cited CBIRC official as saying that the China Banking and Insurance Regulatory Commission (CBIRC) will strengthen coordination with housing and construction authorities and the central bank to back local governments in "guaranteeing the delivery of homes".
In mainland markets, banks lost roughly 1% and real estate developers tumbled more than 3%, while mainland developers listed in Hong Kong slumped roughly 3% to a ten-year low.
At least ten Chinese banks said mortgages related to risky property projects are relatively small, and risks are controllable.
Chinese Premier Li Keqiang said the government will support the economy while preventing inflation, state media reported on Thursday, signalling increased concerns over price rises.
The Hang Seng index in Hong Kong was down 0.7% at 20,612.07 points.
Tech giants traded in Hong Kong retreated more than 1%, with Alibaba down down more than 3%.