SHANGHAI, March 20 (Reuters) - Mainland China shares

inched higher on Friday, recouping the psychologically important

4,000-point level, underpinned by gains in photovoltaic stocks

following a Reuters' report that Tesla is seeking to purchase

solar equipment from Chinese firms.

** At the midday break, the benchmark Shanghai Composite

index was up 0.16%, while the blue-chip CSI300 Index

rose nearly 1%.

** Photovoltaic shares led the gains, with a sub-index

tracking the sector jumping 4.8%.

** The photovoltaic sector saw sharp gains after Tesla

was reported to be seeking to buy $2.9 billion worth of

equipment from Chinese suppliers, including Suzhou Maxwell

Technologies, for manufacturing solar panels and

cells. CEO Elon Musk aims to add 100 gigawatts of solar capacity

in the United States.

** Meanwhile, China's central bank said it will fully

leverage its financial tools to "resolutely safeguard the stable

operations of stock, bond, foreign exchange and other financial

markets," the People's Bank of China (PBOC) said in a statement

published on Thursday.

** The war in Iran has sparked worries over inflation risks

and roiled global financial markets. Top central banks said on

Thursday they stood ready to tackle any surge in inflation with

tighter policy, as an escalation in the Iran war put the Middle

East's vital energy infrastructure in the line of fire and

pushed fuel prices higher.

** Earlier in the session, China left its benchmark lending

loan prime rates (LPRs) for March unchanged, the 10th

consecutive month, in line with market expectations, as surging

global oil prices driven by the war cloud the inflation outlook.

** "With the Federal Reserve constrained in its easing cycle

and the USD remaining firm, the PBOC faces a narrower policy

corridor, balancing domestic growth support with FX stability,"

said Byron Lam, an economist at DBS.

** "Rising imported energy costs could further complicate

easing, as policymakers weigh growth support against imported

inflation risks."

** In Hong Kong, the benchmark Hang Seng Index

slipped 0.63%, while the city's tech shares lost 1.7%.