HK shares end up 1 pct; China stocks at 2-wk low

* HK shares pushed up by bargain-hunters

* Brief oil price fall drives HK airlines up, China hit

* Energy stocks lead China market to two-week closing low

* More IPO shares to enter mainland market
(Updates to close)

By Nerilyn Tenorio and Claire Zhang

HONG KONG, Sept 22 (Reuters) - Hong Kong shares closed up
1.06 percent on bargain-hunting interest in a consolidating
market on Tuesday, while Shanghai stocks slid 2.34 percent to a
two-week closing low on lower fuel prices and worries about share
supply.

The overnight drop in crude oil prices drove Hong Kong-listed
airline stocks higher, but put oil and energy producers in
mainland China under pressure.

Airline stocks were also underpinned by mainland initiatives
to restructure the aviation freight industry, while Hong Kong
investors in general were encouraged by a firm start in European
equities trading on Tuesday afternoon during Asian trading.

"In the morning, the movement wasn't that good but sentiment
continued to improve in the afternoon when the European markets
opened a bit higher, and because of expectations of better
economic data from the U.S," said Kenny Tang, head of research at
Redford Securities in Hong Kong.

The Hong Kong and Shanghai markets are expected to be
range-bound this week as they continue to digest the implications
of recent IPO approvals and the resurgence of the U.S. dollar.

The benchmark Hang Seng Index closed up 228.29 points at
21,701.14, with turnover down at about HK$50 billion ($6.45
billion) from Monday's HK$57.5 billion.

The China Enterprises Index of top locally listed mainland
Chinese stocks firmed 0.75 percent to 12,511.55.

Cathay Pacific (0293.HK) jumped as much as 3.7 percent
intraday while China Southern Air (1055.HK) spiked 4.7 percent,
bolstered by a brief fall overnight in crude oil prices and
mainland initiatives to restructure the aviation freight
industry. By the close of trade in Hong Kong, Cathay Pacific was
up 3.51 percent at HK$12.98, parent Swire Pacific (0019.HK) was
up 1.76 percent at HK$92.50, and China Southern was up 3.95
percent at HK$2.63.

The Chinese measures include complete policy support for
aviation freight companies in terms of market access, the
management of flights and routes, transportation prices, and the
protection of newly-opened routes.

NYMEX crude oil dropped $2.33 to $69.71 per barrel on Monday,
but rose again on Tuesday, reaching $70.50 by late afternoon.

Sinopec (0386.HK) (SNP.N) (600028.SS), Asia's top oil
refiner, also benefitted from the brief fall in crude oil prices,
although the company said earlier that demand for industrial
fuels remained depressed in China, the world's second-largest oil
consumer. The stock hit a high of HK$6.90, up 1.62 percent,
before shaving the gain to 0.59 percent at HK$6.83.

Sun Hung Kai Properties (0016.HK), rallied 2.12 percent to
close at HK$115.50, on brisk project sales.

ENERGY LEADS SHANGHAI FALL

China's key stock index sank 2.34 percent to a two-week
closing low on Tuesday, led by energy shares after crude oil slid
overnight, while sentiment was hurt by worries over a slew of
fund-raisings and more share supply.

The Shanghai Composite Index .SSEC ended at 2,897.553
points, after eking out a gain of 0.15 percent on Monday as
retailers helped to reverse earlier sharp losses.

Losing Shanghai A shares outnumbered gainers 764 to 114,
while turnover dropped to 138 billion yuan ($20 billion) from 145
billion yuan on Monday.

The stock regulator said late on Monday it had granted
approval for another four companies to go public on the
Nasdaq-style second board to be launched soon on the Shenzhen
Stock Exchange, following news 10 companies to be listed would
take subscriptions from investors this Friday.

China's top travel agency, China International Travel Service
Corp, also set the price range for its upcoming Shanghai listing
at a high valuation and said it would take subscriptions over the
next two days. [ID:nSHA225415]

"Fundraising and upcoming IPOs hit sentiment, and with more
uncertainties likely to emerge after the National Day holiday,
investor confidence is waning," said Chen Shaodan, senior analyst
at Stockfly Securities in Beijing.

She added that the index may test support at its 125-day
moving average, now at 2,845 points before the holiday.

Metallurgical Corp of China (601618.SS), the company that
helped build Beijing's "Bird's Nest" Olympic stadium and the most
actively traded share in Shanghai, dropped 8.5 percent to 6.35
yuan after managing a modest debut in Shanghai on Monday.
[ID:nSHA168528]

PetroChina (601857.SS), the most heavily weighted stock in
the index, sank 2.18 percent to 12.99 yuan, while China Shenhua
Energy (601088.SS) lost 3.97 percent to 31.94 yuan.

Guoyuan Securities (000728.SZ) fell 6.7 percent to 19.30 yuan
after saying on Tuesday that it had won China Securities
Regulatory Commission (CSRC) approval to raise up to 10 billion
yuan in a new stock offer.

Steel shares were weak, with Tangshan Iron and Steel
(000709.SZ), the most actively traded in Shenzhen, Handan Iron
and Steel 600001.SS and ferroalloy producer Chengde Xinxin
Vanadium and Titanium 600357.SS dropping more than 6 percent
after being suspended since Sept. 16.

Their parent Hebei Iron and Steel Group, the world's
fourth-largest steel maker, said on Tuesday that they had won
regulatory approval to combine and form the country's No.2 listed
steel maker. [ID:nSHA234725]

CITIC Securities said in its latest research note that the
Shanghai index may move between 2,700 and 3,200 points,
suggesting investors could keep eye on sectors such as autos,
banks, papermaking, home appliances and construction.
(Editing by Jacqueline Wong and Chris Lewis)