China shares stabilise as state media urges calm

* SSEC down 0.25%; CSI300, HSI rebound

* Yuan, Chinese government bonds stable after late sell-off

* State-owned papers urge calm after rout

SHANGHAI, July 28 (Reuters) – Chinese shares recovered earlier losses on Wednesday amid volatile trade as state-run financial media called for calm, but investor concerns about tightening government regulation continued to weigh on sentiment.

In morning trade, the Shanghai Composite Index fell as much as 2% before trimming losses to 0.25%. The blue-chip CSI300 index was up 0.23%, reversing earlier losses but still down more than 6% for the week.

In Hong Kong, the benchmark Hang Seng Index rose 0.56% after plunging to an eight-month closing low a day earlier. The Hang Seng China Enterprises Index was up 1.25%.

Wobbly trade in Chinese A-shares came as state-owned securities newspaper urged calm on Wednesday, saying that the market “will stabilise at any moment” after regulatory moves aimed at the education, property and technology sectors sparked heavy selling this week.

Fixed income and foreign exchange markets were relatively steady on Wednesday after succumbing to Tuesday’s sell-off. The most-traded 10-year Chinese government bond futures, for September delivery, were last down 0.08%, following a 0.35% drop a day earlier.

The onshore spot yuan firmed to 6.5034 per dollar despite a late slump a day earlier that fed into the People’s Bank of China’s weakest daily fixing in three months on Wednesday.

The offshore yuan strengthened to 6.5133 per dollar.

China’s regulatory moves seem “to have led to a further reassessment of the extent to which the Chinese authorities are happy to make life more difficult for private business in the pursuit of other aims,” Oliver Allen, markets economist at Capital Economics said in a note.

“That is obviously bad news for certain Chinese firms, but it need not have major consequences for markets elsewhere.”

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