March 3 (Reuters) – Hong Kong stocks climbed the most in six weeks to end higher on Wednesday, lifted by financials, as optimism towards economic growth in China outweighed investor concerns over inflation.

** The Hang Seng index and the China Enterprises Index each ended 2.7% firmer at 29,880.42 points and 11,666.24 points, respectively.

** China’s top banking watchdog on Tuesday cautioned against the risk of bubble bursting in global financial markets, and said Chinese regulators were studying effective measures to reduce the risk of foreign capital inflows.

** “Investors should not read too much into the hawkish comment from China’s top banking regulator Chairman Guo Shuqing,” Larry Hu, economist at Macquarie Capital Ltd said, adding that Guo has been hawkish most of the time, and its China’s Politburo, not Guo, who sets the policy tone in China.

** Investors also appeared to have shrugged off results from a private sector survey that showed China’s services sector activity grew at its slowest pace in 10 months in February.

** “We expect manufacturing and services PMIs to recover in March, as the COVID-19 situation was quickly brought under control in recent weeks, Beijing may gradually relax some social distancing rules in coming months and some pent-up demand could be released,” Nomura wrote on Wednesday.

** “The economic recovery that will gather strength over the course of 2021 shouldn’t lead to a rapid pick-up in inflation,” Luca Paolini, chief strategist, Pictet Asset Management said, adding that he expects stocks to extend gains in the coming months.

** Financial stocks jumped 3.6%, while commerce and industry index rose 2.5%.

** Investors are also dissecting the impact from Hang Seng Index’s planned restructuring, which will see the number of its constituents raised to 88 by mid-2022, from 55 currently. The number will eventually expand to 100.

** Financial sector’s index weight would likely experience the biggest drop – to 32.8% from 41.9% – while consumer discretionary stocks would likely have the biggest lift to 22.4% from 15.8%, according to Morgan Stanley estimates. (Reporting by the Shanghai Newsroom, Editing by Sherry Jacob-Phillips)