SHANGHAI, Nov 26 (Reuters) - China and Hong Kong stocks

rose on Wednesday, buoyed by overnight strength on Wall Street

and Alibaba's ( BABA ) plan to keep investing "aggressively" in

artificial intelligence.

** China's blue-chip CSI300 Index climbed 0.8% by

the lunch break, while the Shanghai Composite Index

gained 0.1%. Hong Kong's benchmark Hang Seng Index was up

0.5%, led by tech shares.

** Wall Street extended its rally on Tuesday as a spate of

economic data appeared to support the case for a December

interest rate cut by the U.S. Federal Reserve.

** Sentiment was also aided by Alibaba's ( BABA ) forecast-beating

quarterly revenue, and the e-commerce giant's vow to invest in

AI infrastructure "aggressively".

** UBS Asset Management said Chinese equities remain

attractively valued, and with continued macro upside.

** "We are far from overheated - the next stage for Chinese

equities will be driven by fundamentals," said Bin Shi, head of

China Equities at UBS AM. "All the market performance so far has

been achieved without a very strong economy - if the economy

cooperates, there's more upside ahead."

** "We see China is turning a new page - growth underpinned

by new drivers like AI," said Jade Fu, portfolio manager at UBS

AM.

** The CSI Artificial Intelligence Index surged

4.2%, the CSI Cloud computing Big data Index leapt

3.8% and the STAR Chip Index jumped 2.3%.

** In Hong Kong, biotech, AI and

automobile stocks led the gains.

** "We continue to highlight the structural improvements in

the Chinese equity market landscape to global investors with

strong conviction that they will continue," Morgan Stanley

equity strategist Laura Wang said in a note.

** Improvements in China include better corporate

governance, friendlier business environment for the private

sector, reduced Sino-U.S. tensions and high confidence in

Beijing's determination to cushion against a significant

economic downturn, Wang said.