HK, China shares rally on optimism; HK banks shine

* HK benchmark index sets high for year above 21,900 pts

* Banks lead rise with HSBC up 4 pct to new high

* China stocks up 2 pct ahead of national day holiday
(Updates to close)

By Claire Zhang and Donny Kwok

HONG KONG, Sept 17 (Reuters) - Hong Kong shares rose on
Thursday to close at a high for this year, with China shares
also higher, tracking firmer markets overseas and fuelled by
ample liquidity and optimism for more positive economic data.

Sentiment in Shanghai stayed positive on hopes for stable
government policy ahead of the week-long National Day holiday
from Oct 1.
Hong Kong's benchmark index set a new high for the year
above the 21,900-point level after rising as much as 2.46
percent intraday. Shanghai's key index closed 2.02 percent
higher to above the key psychological level of 3,000 points.

Brokers said U.S. dollar weakness and a market awash with
liquidity gave local stocks a push, with confidence in economic
recovery also stronger.

Banks in Hong Kong continued to lead gains with index
heavyweight HSBC (0005.HK) up 4.06 percent at HK$90.95, a high
for this year. ICBC (1398.HK) rose 1.3 percent to a year high of
HK$6.23 and China Construction Bank (0939.HK) was up 0.5 percent
at HK$6.48.

"The market was up about 1,000 points in the last two days
and it pulled back a bit from a high this afternoon as players
locked in gains," said Andrew To, a sales director at Tai Fook
Securities. "I would not put a bet for further upside after the
recent rally."

The benchmark Hang Seng Index .HSI rose 1.71 percent, or
365.59 points, to end at 21,768.51. The China Enterprises Index
.HSCE, which represents top locally listed mainland Chinese
stocks, was up 1.14 percent at 12,668.25.

Turnover increased to HK$84.66 billion (US$10.9 billion)
against HK$69.9 billion on Wednesday.

Riding on the market strength, cash-strapped Cathay Pacific
Airways (0293.HK) rallied 5.5 percent to end at HK$13.04 after
Hong Kong's flagship carrier said it was selling shares in
aircraft maintenance unit HAECO (0044.HK) and six Boeing
aircraft currently on order to boost its capital.

The airline, Asia's No.4 carrier, is expected to post a
one-time gain of HK$1.27 billion from the deal to help finance
its capital spending requirements for new aircraft, which are
estimated at HK$4 billion this year and HK$7 billion in 2010.

Steel-to-property conglomerate CITIC Pacific Ltd (0267.HK)
gained 2.5 percent on reports it aimed to list in China, joining
other top Hong Kong-listed Chinese companies that are looking to
list in their home market. [ID:nHKG353825].

Sun Hung Kai Properties (0016.HK) rose 3.27 percent to
HK$116.70 as analysts focused on the developer's 2010
prospects, assuming underlying residential, retail and office
rental growth.

Chinese gold miner Zijin Mining (2899.HK) rose 2.6 percent
as gold hit an 18-month high of $1,023.85 on Thursday, close to
its record peak of $1,030.80 per ounce. [ID:nLH421860]

SHANGHAI RISES AHEAD OF NATIONAL DAY

China's key stock index ended up 2 percent on Thursday at a
more than one-month closing high, with energy shares active,
bolstered by hopes of economic recovery and stable government
policy ahead of the National Day holiday.

The Shanghai Composite Index .SSEC closed at 3,060.260
points, after fluctuating around its key psychological level of
3,000 points and falling 1.1 percent on Wednesday.

Gaining Shanghai A shares outnumbered losers by 817 to 119,
while turnover remained active at 178 billion yuan ($26 billion)
against 168 billion yuan on Wednesday.

A senior government economist said on Thursday that China's
economy may regain double-digit annual growth in the fourth
quarter of this year. [ID:nPEK368397]

"Turnover was active suggesting the underlying sentiment is
strong in some sectors and stocks. The situation looks sound,
supported by steady economic recovery," said Chen Huiqin, senior
analyst from Huatai Securities in Nanjing.

The index may soon test resistance at its 60-day moving
average of 3,086 points and would mainly fluctuate between 3,000
and 3,100 points, analysts said.

They said sentiment would largely stay positive as investors
expected the authorities to keep policy stable ahead of the
country's week-long National Day holiday starting on Oct. 1.

China would maintain its "appropriately loose" monetary
policy into next year, domestic media on Thursday cited a
central bank official as saying. [ID:nBJB000671]

"Policy will be kept stable before the October holiday so
the index could advance mildly," said Qian Xiangjing, chief
analyst from CITIC-Kington Securities in Hanzhou.

Qian added that corporate fundraising may drain money from
the stock market and weigh on sentiment after celebrations to
mark the 60th anniversary of the founding of the People's
Republic of China.

Oil refiners were firmer with Sinopec (600028.SS) climbing
2.91 percent to 12.37 yuan as U.S. crude futures steadied above
$72 per barrel on Thursday.

Coal shares were strong with China Shenhua Energy
(601088.SS) advancing 3.36 percent to 34.74 yuan after saying it
produced 17.9 million tonnes of coal in August, up 13.3 percent
from a year earlier, with sales up 8.3 percent to 20.9 million
tonnes.

Metal stocks were firmer, with Aluminum Corp of China
(Chalco) (601600.SS) gaining 1.69 percent to 15.07 yuan after
its parent Chinalco said late on Wednesday it would start
construction of a $2.2 billion Peruvian copper mine Toromocho in
early 2010 and begin production in the last quarter of 2012.
[ID:nN16134761]
(Editing by Chris Lewis)