HK, China shares rise on encouraging economic data

* Aug lending data boosts China bank & property shares

* Gains in Shanghai limited as MCC IPO freezes up $234 bln

* HK, China markets headed for strong weekly gains

By Parvathy Ullatil and Claire Zhang

HONG KONG, Sept 11 (Reuters) - China and Hong Kong shares
rose on Friday after August data signalled a recovery was well on
track in the world's third-largest economy.

Chinese industrial output, investment and credit all grew
more quickly than expected in August.

"China's growth is increasingly being driven by consumption
and private sector investment, reducing the dependence on fiscal
stimulus, lowering the risk of "wasteful investment" and policy
intervention," said analysts with Morgan Stanley in note on
Friday.

Bank stocks were among the top gainers on Friday after data
showed banks extended 410.4 billion yuan ($60.11 billion) in new
local-currency loans in August, up from 355.9 billion in July.

Yuan lending in the first eight months totalled 8.15 trillion
yuan, far exceeding what the government had said was its minimum
target of 5 trillion yuan for all of 2009. Regulators now expect
the full-year total will be nearer to 10 trillion yuan.

Industrial and Commercial Bank of China (1398.HK), the
world's largest lender, rose 1.4 percent in Hong Kong while China
Merchants Bank (600036.SS) gained 2 percent at 14.43 yuan in
Shanghai.

GAINS LIMITED AFTER RECENT RALLY

By midday the benchmark Hang Seng Index .HSI was up 0.8
percent at 21,237.48.

But turnover stayed skimpy at HK$33.9 billion ($4.37
billion), with investors reluctant to bet on a further upside
after the main index scaled its highest level since August 2008
on Thursday.

The index has piled on more than 1,700 points since last
Wednesday while blue chip stocks are trading at over 18 times
their estimated earnings.

The China Enterprises Index .HSCE, which represents top
locally listed mainland Chinese stocks, was up 1.1 percent at
12,347.01.

Energy stocks rose after oil prices extended a four-day rally
to over $72 a barrel on Friday after a U.S. report showed a
surprise decline in crude stockpiles and OPEC said it would
maintain official output curbs.
Shares in offshore oil producer CNOOC (0883.HK) gained 2.4
percent to HK$11.04 while Asia's largest oil and gas producer
PetroChina (0857.HK) was up 2.1 percent at HK$9.23.

China's crude oil imports in August surged about 25 percent
to a near record high of 19.6 million tonnes, indicating strong
demand for the commodity. [ID:BJK000012]

Shares in port operator China Merchants Holdings (0144.HK)
advanced 4.8 percent to HK$28.45 after the company's first-half
earnings matched forecasts, while analysts cheered its ability to
minimise profit declines, at 14.4 percent, amid a tough operating
environment.

Morgan Stanley raised its target price on the stock to
HK$30.66 from HK$26.80 saying it was in the best position, among
its peers, to benefit from the recovery in trade volumes.

WEN'S COMMENTS BOOST CONFIDENCE

The Shanghai Composite Index .SSEC ended the morning 1.2
percent higher at 2,959.999 points, after snapping a seventh
rising session on Thursday as investors cashed in recent gains
ahead of the country's August economic data.

"Both M2 and new loan data rose from last month. The stock
market rebound can be expected to continue," said chief
strategist Yu Jun at CITIC Securities in Beijing.

Premier Wen Jiabao's remarks on Thursday about policy also
underpinned the market's positive sentiment.

Wen told the World Economic Forum in Dalian that China would
unswervingly apply its policy mix of massive government spending
and loose money because its economic recovery remained fragile.
[ID:nPEK12318]

The index is heading for a 3.4 percent gain so far this week
after edging up just 0.03 percent last week.

Gaining Shanghai A shares outpaced losers by 802 to 110,
while turnover remained little changed at a thin 62 billion yuan
($9 billion) from Thursday morning.

China's industrial output expanded in August at the fastest
rate in 12 months and narrowly topped forecasts, showing that the
economy was well on the road to recovery. [ID:nPEK293624]

But August exports fell about 23 percent from a year earlier,
while imports were down about 17 percent, lagging forecasts.
[ID:nBJB000662]

"The data is generally in line with expectations, plus Wen
mentioned inflation. Investors can draw more confidence about the
economic recovery, so the index could ride higher," said Xu
Yinhui, senior analyst at Guotai Junan Securities in Shanghai.

Although most of the data was more upbeat than July,
sentiment remained cautious as profit-taking pressure lingered,
some analysts said.

"Large caps seem to be losing momentum and with small
turnover it's hard for the index to tackle the 3,000 resistance
level for the moment. There is profit-taking pressure," said Li
Wenhui, senior analyst at Huatai Securities in Nanjing.

Metallurgical Corp of China (MCC), which is raising up to
$5.3 billion in the world's second-largest initial public
offering this year, has seen the subscriptions to its Shanghai
portion of the IPO freezing up a huge 1.6 trillion yuan ($234
billion). [ID:nSHA361501]

Part of the money unfrozen for unsuccessful bidders may flow
back to the stock market on Friday and Monday.

The property sector led gains as investment growth
accelerated sharply and prices and sales continued to rise in
August. Industry leader China Vanke (000002.SZ) climbed 2.48
percent to 11.59 yuan.
(Editing by Jonathan Hopfner)