Hong Kong shares up on bullish bank outlook; China rises

* China B shares hit 18-month high on speculation

* ICBC rises 2 percent on bullish outlook

* Taifook advances to 21-month high on CCB interest

* BEA down 4 percent after bank says not in M&A talks
(Updates to close)

By Sui-Lee Wee and Claire Zhang

HONG KONG/SHANGHAI, Nov 13 (Reuters) - Hong Kong stocks rose
on Friday, buoyed by a bullish outlook from Industrial and
Commercial Bank of China and a spurt of corporate takeover talk
in the financial sector, while foreign-currency-denominated B
shares jumped to an 18-month high in China on speculative trade.

ICBC (1398.HK) rose 2 percent to HK$6.80 after its chairman
said he expected the non-performing loan situation in China's
banking sector to improve next year as Chinese companies climbed
out of the global economic crisis. [ID:nSP544236].

Taifook Securities (0665.HK) gained 6.59 percent to HK$4.85
after rising as much as 9.9 percent to its highest since January
2008. Reuters reported on Thursday that China Construction Bank
(0939.HK) was in talks to buy control of the brokerage to give it
a solid footing in Hong Kong's lucrative retail securities
market. [ID:nHKG329606]

Bank of East Asia (0023.HK), Hong Kong's No.5 bank, was the
top loser among index heavyweights after the lender said it was
not in talks on a potential acquisition. [ID:nHKG328800]
The stock fell 3.67 percent to HK$32.80.

Rumours that Malaysian conglomerate Guoco Group (0053.HK)
could be interested in BEA had sent the bank's shares up 26
percent in the last two days.

Brokers said the flurry of takeover talk was fueling optimism
about share values.

"Every couple of years, we have takeover stories on Hong Kong
banks," said Howard Gorges, director at South China Brokerage.
"People are punting and chasing stories in second-line
companies."

"There's certainly some catch-up value (in these stocks)
compared with the big ones. It's a reflection of the amount of
cash around and underlying confidence in the market," he said.

The benchmark Hang Seng Index .HSI rose 0.7 percent or
156.06 points to 22,553.63, up 3.3 percent on the week.

Turnover was almost unchanged at HK$70 billion, from
Thursday's HK$70.95 billion.

The China Enterprises Index of top locally listed mainland
Chinese stocks .HSCE rose 1.03 percent to 13,461.79.

Simsen International (0993.HK) jumped as much as 52 percent
to HK$0.47 intraday, its highest since November 2007, after the
brokerage said its controlling shareholders were in preliminary
talks with a potential acquirer. The stock closed at HK$0.40, up
29.03 percent.

Shui On Construction and Materials Ltd (0983.HK) rose 7.93
percent to HK$12.52 after Reuters reported that the company and
Lafarge (LAFP.PA), the world's largest cement maker, were set to
spin off their cement joint venture, hoping to raise $500
million-$600 million from a Hong Kong initial public offering in
2010. [ID:nHKG88574]

SHANGHAI RISES, BUOYED BY ROSY OUTLOOK

China's key stock index edged up 0.46 percent, boosted by the
upbeat outlook for the economy and company earnings.

The Shanghai Composite Index .SSEC ended at 3,187,647
points, reversing losses early in the session and securing a 0.7
percent gain for the week.

Gaining Shanghai A shares outnumbered losers by 601 to 270
while turnover rose to 163 billion yuan ($23.88 billion) from
WednesSay's 144 billion yuan.

Shanghai's index of U.S. dollar-denominated B shares .SSEB
ended up 9.42 percent at 251.192 points, close to its 10 percent
daily limit, while volume nearly tripled from the previous day to
$326.5 million on the thinly traded market.

Market sources said long-running speculation resurfaced about
a possible merger with the far larger yuan-denominated A-share
market or a requirement for companies to buy back B shares.

Both moves would likely favour B shares, which are
undervalued compared to their A-share counterparts.

Analysts also cited rising expectations of yuan appreciation
as favourable for B shares, which are denominated in U.S. dollars
in Shanghai and U.S. dollar-linked Hong Kong dollars in Shenzhen,
while the companies hold yuan-denominated assets.

"Investors could wait to see if any actual policy comes out
over the weekend regarding B shares. Otherwise, B shares may be
hit by profit-taking next week," said Zhang Xiang, chief
strategist at Guodu Securities in Beijing.

Official media on Friday quoted Fan Jianping, chief economist
with the State Information Centre, as saying that China's
economic recovery was exceeding expectations and that full-year
growth would be about 8.3 percent. [ID:nSHA79146]

The stock index is likely to rise slightly next week, Zhang
said, but added that significant gains were unlikely in the near
term, after a sustained rally early this month, and that it would
resistance at 3,200 points.

Shares of companies that produce snow-clearing products rose
after heavy snow hit many regions of China. [ID:nPEK344476]

Changlin Co (600710.SS) advanced 3.29 percent to 6.60 yuan
while Qingdao Soda Ash Industrial (600229.SS) climbed 5.47
percent to 7.13 yuan.
(Editing by Chris Lewis)