China jumps, led by shipping stocks; HK slips

* China index surges in afternoon, led by shipping stocks

* Banks fall on worries about Beijing's curbs on lending

* Chalco slips 2.4 pct on weak Alcoa results (Updates to close)

By Sui-Lee Wee and Claire Zhang

HONG KONG/SHANGHAI, Jan 12 (Reuters) - China's key stock index ended nearly 2 percent higher on Tuesday, with shipping and telecom shares rising as prospects for economic recovery offset concerns over the central bank's latest monetary tightening steps.

The Shanghai Composite Index .SSEC ended at 3,273.966 points, posting its biggest daily percentage rise in more than two weeks, and bouncing off its intraday low of 3,180.085.

Gaining Shanghai A shares outnumbered losers 818 to 82, while turnover eased to 173 billion yuan from Monday's 177 billion yuan, which was more than a one-month high.

"Investors expect December data to be strong. Large caps could draw strength from index futures and the short-selling business," said Chen Jinren, senior analyst at Huatai Securities.

China Shipping Container Lines (601866.SS) jumped by its 10 percent daily limit to 5.16 yuan as upbeat Chinese trade data and global economic recovery optimism supported the outlook for the shipping industry.

Telecommunication shares outperformed, with China United Network Communications (600050.SS), the most actively traded Shanghai stock, rising 5.6 percent to 7.54 yuan.

"The index is expected to stay range-bound from 3,100-3,300 points in the short term. The central bank's signal that it is tightening liquidity is negative for sentiment, but other sectors are strong backed up by earnings and prospects for economic recovery," said Wen Lijun, analyst at Nanjing Securities.

China's central bank on Tuesday raised the auction yield on its one-year bills by a bigger-than-expected 8.29 basis points, in a further signal it is ratcheting up monetary tightening. [ID:nTOE60B02I]

The banking sector was mixed, jittery over possibly more credit controls. Top lender Industrial and Commercial Bank of China (601398.SS) rose 0.75 percent to 5.34 yuan.

The property sector rebounded, although it was weighed down by the government's clampdown on rising asset prices but drew support from upbeat sales at real estate companies.

Gemdale Corp (600383.SS), a leading Chinese property developer, climbed 1.91 percent to 13.37 yuan after saying its 2009 sales soared 84.6 percent from a year earlier.

Brokerage shares eased on profit-taking after jumping on Monday following news the government had approved short selling. Haitong Securities (600837.SS) edged up only 0.1 percent to 19.15 yuan after gaining 1.06 percent on Monday.

Among gainers, Chinese motorcycle maker Zongshen Power Machinery (001696.SZ) extended its rise, up 9.88 percent to 22.11 yuan despite the company denying media reports that U.S. investor Warren Buffett had shown interest in the firm. [ID:nTOE60B018]

Sanan Optoelectronics (600703.SS) soared its 10 percent daily limit to 69.29 yuan after suspending trade on Jan. 7. It plans to invest 12 billion yuan in the city of Wuhu in the eastern province of Anhui to build a manufacturing hub of light-emitting diodes (LED), a semiconductor light source.

HONG KONG FALLS

Hong Kong shares slipped 0.38 percent in choppy trade, as Chalco fell on weak results from global peer Alcoa, while persistent worries about Chinese curbs on bank lending put pressure on lenders.

The benchmark Hang Seng Index .HSI ended down 84.88 points at 22,326.64. The China Enterprises Index .HSCE of top locally listed mainland Chinese stocks fell 1.16 percent to 12,967.37.

"There's extreme resistance at the 22,500 level," said Alfred Chan, chief dealer at Cheer Pearl Investment. "Investors will consolidate their positions at the 21,900 level until better news comes along before the next bull run."

Market turnover rose to HK$81.22 billion ($10.47 billion) from Monday's HK$74.18 billion.

"There's a lack of direction in the market," said Peter Lai, a director at DBS Vickers. "There are too many uncertainties. People are still waiting for many economic figures from the U.S. and China to come out."

"The mainland government has been trying to suppress the property market," he said. "In the short term, the banks will remain under selling pressure, along with the property counters."

Banking stocks slid in active trade amid concerns that Beijing will rein in lending.

Industrial and Commercial Bank of China (1398.HK) fell 2.23 percent to a three-week low of HK$6.15. China Construction Bank (0939.HK) lost 2.13 percent to a near two-week low at HK$6.42 and Bank of China (3988.HK) fell 2.36 percent to its lowest level in more than a week, at HK$4.14.

Chinese bank lending reportedly surged in the first week of 2010, adding to concerns fuelled by blockbuster trade data for December that the world's third-largest economy is overheating. [ID:nTOE60A021].

Data on Chinese bank lending is expected sometime this week, while China is set to report fourth-quarter GDP next week.

Shares in Aluminum Corp of China Ltd (Chalco) (2600.HK), fell as much as 4.7 percent as investors reacted to worse-than-expected results from U.S. aluminum producer Alcoa Inc (AA.N). [ID:nN11155201]

By midday, the stock, which had hit an 18-month high on Monday, closed at HK$10.38, down 2.44 percent.

Shares in Lenovo Group (0992.HK) bucked the overall weakness, rising as much as 7.9 percent on Tuesday on expectations that sales of the computer maker's new products will be strong in China, Lai said. By midday, the stock was up 4.91 percent at HK$5.56.

Sands China (1928.HK), the Macau unit of Las Vegas Sands (LVS.N), bucked the overall weakness, rising 4.88 percent to HK$11.60, on hopes that strong economic growth in China will lead to higher gambling revenues in neighbouring Macau, dealers said. (Editing by Ken Wills)