China stocks on track for best day in a month ahead of Trump-Xi meeting; Hong Kong rises

SHANGHAI, Sept 18 (Reuters) - China stock benchmarks are on track to log their best day in a month on Friday, while Hong Kong shares also gained, as traders expect trade tensions to ease after next week’s meeting between U.S. and Chinese presidents.

** China’s large-cap CSI300 Index .CSI300 and the Shanghai Composite Index .SSEC were up about 1% by the lunch break, on track for their biggest one-day gain since mid-August.

** In Hong Kong, the Hang Seng Index .HSI climbed 0.7%.

** U.S. President Donald Trump will welcome his Chinese counterpart Xi Jinping in Washington next week for their second meeting this year, as the two leaders seek stability in a fraught relationship.

** U.S. Trade Representative Jamieson Greer said this month the countries will make "some ‌announcements on agriculture and non-tariff barriers" and traders will be watching for progress on an agreed mutual tariff reduction covering $30 billion in goods.

** With U.S. rate hike also in the rearview mirror, “the external risks have weakened,” Great Wall Securities said in a note.

** Bets on China’s AI and chipmaking sectors are still advisable, the brokerage said.

** Goldman Sachs said that despite China’s economic headwinds from weak domestic demand, “we continue to see several bright spots in the economy, including the global expansion of Chinese companies.”

** China’s chipmaking and AI stocks jumped on Friday.

** The CSI Integrated Circuits Index .CSI932087 surged 5%, while the CSI AI index .CSI930713 gained 3%.

** Semiconductor and AI stocks also led gains in Hong Kong.

** But energy .HSCIE.CSIEN and consumer .CSI000912 shares weakened in both markets, reflecting investors’ preference toward “new economy” stocks.