Hong Kong shares up on M&A hopes; China slips
* Taifook hits 21-mth high on CCB interest
* BEA falls after bank says not in M&A talks
* China shares fall on profit-taking (Updates to midday)
By Sui-Lee Wee and Claire Zhang
HONG KONG/SHANGHAI, Nov 13 (Reuters) - Hong Kong stocks rose 0.11 percent in midday trade on Friday, as a spurt of corporate takeover talk in the financial sector offset concerns about weak U.S. consumer spending.
Taifook Securities (0665.HK) rose as much as 9.9 percent to to HK$5.00, its highest since January 2008, after 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].
By midday, the stock, which jumped 13 percent on Thursday, traded at HK$4.63, up 3.3 percent from the previous close.
But 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 4.4 percent to HK$32.55.
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 is 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) as compared to the big ones," he said. "It's a reflection of the amount of cash around and underlying confidence in the market."
The benchmark Hang Seng Index .HSI rose 24.2 points to 22,421.77 at midday. Turnover increased slightly to HK$41.2 billion ($5.3 billion), from midday Thursday's HK$40.97 billion.
The China Enterprise Index .HSCE of top locally listed mainland Chinese stocks gained 0.19 percent to 13,350.50.
Simsen International (0993.HK) jumped as much as 52 percent to HK$0.47, its highest since November 2007, after the brokerage said its controlling shareholders were in preliminary talks with a potential acquirer.
By midday, the stock traded at HK$0.40, up 29 percent from the previous close.
Shui On Construction and Materials Ltd (0983.HK) rose 5.7 percent to HK$12.26 after Reuters reported that the firm and Lafarge (LAFP.PA), the world's largest cement maker, are 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 FALLS ON PROFIT-TAKING
China's key stock index fell 0.98 percent, hit by broad-based profit-taking after the market peaked at three-month highs early in the week.
But brokers said sentiment remained strong due to the upbeat outlook for the economy and corporate earnings.
The Shanghai Composite Index .SSEC ended the morning at 3,141.874 points.
Losing Shanghai A shares outnumbered gainers by 662 to 218, while turnover rose to 81 billion yuan ($12 billion) from Thursday morning's 74 billion yuan.
Share prices and trading volume soared on the much smaller foreign currency-denominated B share market, as expectations mounted for renewed yuan appreciation against the dollar, with U.S. President Barack Obama expected to raise concerns about currency issues in his visit to China next week.
There has also been long-running speculation of a possible merger of little traded B shares with yuan-denominated A shares.
The Shanghai U.S. dollar-traded B-share index .SSEB was up 6.05 percent at 243.462 points and the Shenzhen Hong Kong dollar-traded B-share index .SZSB rose 5.49 percent to 609.112 points. Both indexes reached 17 month highs.
Analysts expected the current pull-back in the A share market to be short-lived.
"The index is being hit by profit-taking but the correction will not be too deep," said Chen Huiqin, senior analyst at Huatai Securities in Nanjing.
"Data shows household savings are still shrinking, so it appears that potential returns from the market are still attractive for investors," she said.
Shares of firms that produce snow-clearing products rose after heavy snow hit many regions of China. [ID:nPEK344476]
Changlin Co (600710.SS) advanced 3.91 percent to 6.64 yuan while Qingdao Soda Ash Industrial (600229.SS) climbed 5.62 percent to 7.14 yuan.
(Editing by Jonathan Hopfner)