HK shares gain for 3rd day; China stocks slow down

(Updates to midday)

HONG KONG/SHANGHAI, June 26 (Reuters) - Hong Kong stocks rose 1.2 percent, heading for a third straight winning session on Friday, as investors continued to pile into property and bank stocks on signs the U.S. and China will keep to their easy monetary policies for some time.

But China-listed stocks drifted lower after hitting a one-year closing high on Thursday and gaining 1.3 percent so far this week.

Chinese bank stocks built on previous gains after the official China Securities Journal reported that new lending could reach 1.2 trillion yuan in June, pushing the first-half total past 7 trillion yuan.

Top lender ICBC (1398.HK) rose 1.7 percent to 5.53 yuan in Shanghai while Bank of Communications (3328.HK) surged 4.1 percent to HK$8.44 in Hong Kong.

The central bank said late on Thursday that it would stick to an appropriately easy monetary policy to support an economy that is heading in the right direction but is not yet on a solid footing. [ID:nLP512447]

Here are index moves and top stock moves by midday-

HONG KONG

* The benchmark Hang Seng Index .HSI was up 1.2 percent at 18,487.65.

* Turnover dropped to HK$32.8 billion from midday Thursday's HK$3.7 billion.

* The China Enterprises Index .HSCE, which represents top locally listed mainland Chinese stocks, had risen 1.9 percent to 10,968.39.

* " After the cautious comments from the World Bank and other agencies this week, investors may have even less confidence in a recovery in developed economies. China and Hong Kong are still the places to invest in and last week's correction also freed up some hot money for bargain hunting," said Philip Chan, head of research with CAF Securities.

* China Shenhua (1088.HK), the world's largest coal miner rose 4.6 percent to HK$27.45 after Goldman Sachs raised its rating on the stock to buy from neutral as demand for the commodity showed signs of picking up, while supply from small mines remained tight. The brokerage set a target price of HK$35 on the stock.

* Smaller rival Yanzhou Coal (1171.HK) piled on 4.5 percent to HK$10.64. Goldman Sachs upgraded the stock to buy from neutral with a target price of HK$13.20.

* Asia-focused Standard Chartered (2888.HK) dropped 0.9 percent after it said on Thursday that it remained cautious on its outlook, with consumer banking income for the first half expected to be lower than the previous six months and bad debts rising sharply in the division. [ID:nLP44217]

Another UK-based bank with a strong presence in Asia, HSBC (0005.HK), fell 1.3 percent to HK$65.

* Wing Hang Bank (0302.HK) soared for a second day by 9 percent to HK$73 on speculation about a possible stake buy by China's top lender ICBC (1398.HK), despite a denial from ICBC [ID:nHKG315449]. The stock had also risen 9 percent in the previous session.

* Other small-cap local banks also advanced, with Dahsing Banking Group (2356.HK) gaining 4.6 percent, while Chong Hing Bank (1111.HK) gained 3 percent.

SHANGHAI

* The Shanghai Composite Index .SSEC ended the morning down 0.25 percent at 2,917.759.

* Losing Shanghai A shares outnumbered gainers by 494 to 371, while turnover in Shanghai A shares slipped to 57.3 billion yuan ($8.4 billion) from Thursday morning's 68.6 billion yuan.

* "No sector has taken the lead in the market today, but the index has a chance to rise at end of June on possible buying of large cap stocks by institutions," said Huatai Securities analyst Li Wenhui.

* Two steel mills on Friday denied firm plans to develop an iron ore deposit that officials in Northeast China claimed was the biggest in Asia. [ID:nPEK310931]. They had halted trading on Thursday. Bengang Steel Plates 000761.SZ jumped 9.22 percent to 8.17 yuan in its heaviest trading since it first listed, despite forecasting it would post a loss, as weak steel product prices caused first-half returns to fall by 140-190 percent.

* Angang Steel 000898.SZ lost 2.26 percent to 13.86 yuan after saying it expected first half losses of up to 3 billion yuan, blaming weak steel prices. The stock fell 0.5 percent to HK$13.42 in Hong Kong.

* Drugmakers outperformed, with Jiangzhong Pharmaceutical (600750.SS) climbing 6.68 percent to 15.65 yuan.

Traditional Chinese medicine maker Guilin Sanjin Pharmaceutical, the first to launch an initial public offering after a nearly 10 month IPO suspension, set its price at 19.80 yuan or about 33 times PE ratio, a very high level, analysts said. Other traditional Chinese medicine makers currently trade at an average of 24 times PE ratio.

* With both liquidity and signs of economy recovery being positive, the index may still rise next week after consolidating just below the 3,000-point mark, analysts said.

* A senior government economist said in remarks published on Friday that China's gross domestic product will grow more than 8 percent in the third quarter from a year earlier and over 9 percent in the fourth quarter. [ID:nPEK312289] (Reporting by Parvathy Ullatil in Hong Kong and Claire Zhang in Shanghai; Editing by Lucy Hornby and Ken Wills)