HK, Shanghai shares jump on earnings optimism

* Shippers gains on higher freight rates; metal stocks jump

* Air China soars on upbeat profit forecast

* Shanghai Index up 75 pct YTD; best performing major market (Updates to close)

By Parvathy Ullatil and Claire Zhang

HONG KONG, July 15 (Reuters) - Hong Kong shares gained 2.1 percent on Wednesday, extending the previous session's best-in-a-month rally as strong earnings from two U.S. bellwethers raised hopes for a global economic recovery.

Chinese stocks rose 1.4 percent to a 13-month closing high in the heaviest turnover in two years led by metal and coal shares, on hopes this week's second-quarter growth figures will show a strengthening economic recovery.

"Evidence of sales expansion in the half-year corporate reports could be a trigger for another round of upgrades by analysts," said Grace Tam, vice-president of investment services at JP Morgan Asset Management

Air China (0753.HK) jumped 7.8 percent to HK$4.27 after country's flag carrier said it expected an at least 50 percent growth in its bottom line in the first half of 2009 as fuel costs fell and the domestic air passenger market showed stable growth.

STILL SEEN RANGEBOUND

The benchmark Hang Seng Index .HSI rose 372.93 points to 18,258.66, while turnover improved to HK$60.7 billion from Tuesday's HK$51 billion.

Global lender HSBC (0005.HK) led gains with a 2.4 percent ascent after its U.S. peer Goldman Sachs (GS.N) surpassed expectations in its quarterly earnings.

Bank lending in China hit a record high in June and its currency reserves surged past the $2 trillion mark, prompting the central bank to show more concern about the ample funds in the market. [ID:nPEK129391] Wednesday's batch of figures reinforced the view that the economy was accelerating, and would continue to spur more buying of shares.

"The market's strength seems hard to change in the near term, backed by ample money available for stocks. Economic data are expected to be upbeat, and the positive mood among investors is likely to give the index a further boost," said Wen Lijun, an analyst at Nanjing Securities in Nanjing.

But some market watchers expect shares in Hong Kong and China to be rangebound in the second half of 2009, taking a breather after the sharp run-up in the first six months.

"Markets usually lead earnings upgrades and downgrades, so even if there is a slight analyst upgrade after the interim earnings, it won't help the markets much," said Bratin Sanyal, head of Asian equity ING Investment Management Asia-Pacific.

"The impact of the fiscal stimulus in China will begin to fade, so we need to start seeing improvements in the G7 economies in the third and fourth quarters to act as a catalyst for the market," he said.

On Wednesday, the China Enterprises Index .HSCE, which represents top locally listed mainland Chinese stocks, rose 2 percent or 208.80 points to 10,860.66.

Bourse operator Hong Kong Exchanges & Clearing (0388.HK) was up 3.8 percent on media reports Shenzhen may allow Chinese investors to invest directly in Hong Kong-listed stocks through a depository receipt system.

The speculation comes almost two years after Beijing proposed allowing individual Chinese investors to directly trade in stocks listed in Hong Kong in a scheme dubbed the "through-train". The proposed scheme was soon shelved amid worries about huge capital outflows and the beginnings of a speculative bubble in the Hong Kong market.

SHIPPERS, METAL STOCKS SHINE

The Shanghai Composite Index .SSEC ended up 43.394 points at 3,188.551 points, taking gains so far this year to 75 percent and making it the best-performing major market in the world.

Gaining Shanghai A shares outnumbered losers by 611 to 304, while turnover for Shanghai A shares jumped to 217.2 billion yuan ($31.8 billion), the highest since mid-2007, from Tuesday's 177.8 billion yuan.

Market players are keeping an eye on the central bank's efforts to gradually tighten liquidity. On Wednesday it launched a special bill sale to soak up cash following the resumption of one-year bills last week for the first time in eight months. [ID:nSHA129940]

Analysts believe that any monetary tightening by the PBOC is likely to be gradual and that an increase in policy rates is a long way off as policymakers try to ensure the recovery will be sustained.

In Shanghai, Jiangxi Copper (600362.SS) surged 8.49 percent to 35.91 yuan, while its Hong Kong listed shares (0358.HK) tacked on 6.4 percent at HK$13.30. China Shenhua Energy (601088.SS) jumped 2.41 percent to 33.19 yuan.

China Cosco (1919.HK), the country's largest shipping conglomerate, rallied 5.8 percent, while in Shanghai the stock (601919.SS) raced up by its 10 percent daily limit to 16.08 yuan.

Another bulk carrier, China Shipping Development (1138.HK) rose 9.1 percent, supported by strong gains in the main sea freight index.

The Baltic Dry Index .BADI, which measures changes in the cost of shipping commodities, jumped 4.1 percent on Tuesday, its first winning session this month, as concerns over a slow global economic recovery eased. (Editing by Eric Burroughs and Chris Lewis)