Shanghai: China stocks rose more than 1 percent on Tuesday, as investors bet on improvements in corporate fundamentals, although thin trading after the holiday weekend suggests confidence remains fragile.
But Hong Kong shares lost around 1 percent, as Asian stocks erased earlier gains amid worries about the ability of global central banks to boost growth through aggressive policy easing.
China's blue-chip CSI300 index rose 1.8 percent, to 3,213.35 points by the lunch break, while the Shanghai Composite Index gained 1.6 percent, to 2,985.41 points.
In Hong Kong, the Hang Seng index dropped 1.1 percent, while the Hong Kong China Enterprises Index/slost 1.4 percent.
Stock markets in China and Hong Kong were closed on Monday.
Chinese investors draw solace from the fact that the first-quarter performance of China-listed companies did not tumble as many had feared, while the economy has shown signs of stabilising.
Combined quarterly profits of 2,837 mainland-listed firms dipped only 0.45 percent, while 666 companies, including some struggling steelmakers, had forecast they would post earnings increases or turn to profit during the first half, the official China Securities Journal reported on Tuesday.
"Investors are now betting that government stimulus can feed into companies' second-quarter profit," said Zeng Yan, analyst at Zhongtai Securities.
The improvements may last until the second quarter, but profits could drop after that with no further stimulus, he said, adding that overriding worries about sustainability of the economic recovery was keeping trading volumes thin.
Surveys on economic activity underlined such concerns.
A private survey showed on Tuesday that activity at China's factories shrank for the 14th straight month in April as demand stagnated, forcing companies to shed jobs at a faster pace.
Activity in China's manufacturing sector expanded for the second month in a row in April but only marginally, an official survey showed on Sunday.
Stocks rose across the board on Tuesday, with consumer and IT stocks leading the charge.
Chinese alcohol makers led the consumer staples index up about 4 percent to its highest level since early January, with prices of Wuliangye Yibin Co Ltd, Shanxi Fenjiu and Kouzi Distillery/ssurging.
