(Updates closing prices)

HONG KONG, July 17 (Reuters) - Chinese shares edged up

on Thursday, buoyed by regulatory support for the auto sector

and renewed optimism in AI-related stocks, while Citi upgraded

China equities, citing improved earnings trends and structural

growth themes.

** At market close, the Shanghai Composite index

climbed 0.4% to 3,516.83, and China's blue-chip CSI300 index

was up 0.7%.

** Leading gains were AI-related shares that

added 1.8% and the info tech sector that jumped 2.1%,

as news that Nvidia ( NVDA ) will ramp up supply of H20 chips to

China lifted sentiment.

** Auto stocks edged up 1.7% after authorities

pledged to regulate the excessive competition and intense price

wars in the electric vehicle (EV) industry.

** In Hong Kong, the benchmark Hang Seng Index closed

flat but held near a four-month high.

** The biotech and healthcare sectors

rallied more than 5% each after U.S. President Donald Trump

dialled down his harsh tone towards China, offering fresh

optimism about the trade deal prospects.

** Analysts at Citi upgraded China equities to "overweight",

citing comparatively improved earnings outlook, reasonable

valuations, and structural themes such as AI and corporate

governance reforms.

** Internet names are among the top picks, as recent

headlines about resumed sales of AI chips by U.S. companies to

China could be incrementally positive, the analysts said.

** "While the domestic economic picture remains mixed, a

potential acceleration in support for domestic demand could be

an upside catalyst," they said in a note on Thursday.