HK shares up 2.1 percent, at five-week high

*HSI above 23,000 for the first time in five weeks

*Airlines soar on lower oil, merger talk

*Financials lead gains on U.S rally

HONG KONG, July 23 (Reuters) - Hong Kong shares were up 2.1 percent, with the main index above the 23,000 mark for the first time in nearly five weeks, as lower oil prices eased concern over the impact of high energy costs on businesses and consumers.

Airline stocks soared on the prospects of cheaper jet fuel and speculation of consolidation in the aviation industry after a report in a major business magazine said government officials were considering a merger between two mainland airlines.

China Eastern Airlines (0670.HK) shot up 8.9 percent and Shanghai Airlines 600591.HK jumped 7.3 percent after Caijing magazine reported China's central government and Shanghai's city government are discussing the possibility of merging the carriers. [ID:nBJD000335]

The mainland flag carrier Air China (0753.HK) jumped 5.4 percent and its associate Cathay Pacific Airways (0293.HK) was 5.2 percent higher.

The Hang Seng Index .HSI ended the morning session up 2.1 percent at 23,003.10 after opening at a five-week high.

Mainboard turnover rose to HK$39.7 billion ($5.1 billion) from HK$27.2 billion at mid-day on Wednesday.

Financials led gains with HSBC Holdings (0005.HK) continued its upward march, rising 1.9 percent after analysts declared the stock a safe haven in the troubled financial sector and said the potential decline in its first-half profits was largely reflected in its share price.

"The stock has rallied too much in too little time and the upside looks limited in the short term. Similarly the Chinese banks which have been moving up since the positive earnings announcements and seem close to a near-term peak," said Linus Yip, strategist with First Shanghai Securities.

The China Enterprises Index .HSCE of top locally listed Chinese firms rose 2.7 percent.

Chinese banks and insurers joined the rally in global financials on Wednesday.

China Construction Bank (0939.HK) climbed 3.1 percent and ICBC (1398.HK) gained 2.5 percent. Bank of Communications (3328.HK) advanced 3.7 percent.

Top insurer China Life (2628.HK) climbed 3.2 percent.

Billionaire Li Ka-shing's flagship, Hutchison Whampoa (0013.HK), lagged the broad market with a 0.5 percent fall as investors fretted over how it would finance a 3.1 billion euro ($4.90 billion) port management project in Greece.

A group including Hutchison Whampoa's port operating arm, Hutchison Port Holdings (HPH), emerged as the highest bidder to run and upgrade cargo facilities at Greece's Thessaloniki port (OLTH) (OLTr.AT), the Greek local government said on Tuesday. [ID:nL22100802]

Shares in Asia's largest refiner, Sinopec Corp (0386.HK), jumped 4.8 percent after oil dropped to a six-week low.

Gold miner Zijin Mining (2899.HK) sank 4.4 percent after prices of the precious metal hit a two-week low, dragged down by weaker oil prices.

Peace Mark Holdings 0304.HK surged 8.8 percent after reporting a rise of over 52 percent in profit for the year ended March 2008. JP Morgan upgraded its rating on the the high-end watch retailer to overweight from neutral. (Reporting by Parvathy Ullatil; Editing by Keiron Henderson)