HK, China shares at 5-week high; banks, miners lead

* Hong Kong shares rise; Chinese banks, HSBC lead

* Jiangxi Copper hits five-week high after Chile quake

* China shares end at 5-wk high on loose monetary policy hope (Updates to close)

By Donny Kwok and Lu Jianxin

HONG KONG/SHANGHAI, March 1 (Reuters) - Shares in Hong Kong and China ended at their highest in five weeks on Monday led by Chinese financial stocks on hopes China's loose monetary policy will stay in place, while mining shares surged as copper prices leapt after a massive quake hit top producer Chile.

In Hong Kong, the benchmark Hang Seng Index .HSI ended up 2.17 percent or 448.23 points at 21,056.93, its highest close since Jan. 20.

"Strong resistance was noted at above the 21,000 level as investors were looking to lock in gains rather than betting on a further rise," said Daniel Chan, senior investment strategist from DBS Bank. "The market was focusing on HSBC earnings for hints about the health of the bank as well as its other rivals."

HSBC (0005.HK) gained 0.93 percent to end at HK$86.65, its highest close in more than five weeks, before it announced its results. The bank said after the local market close that its underlying pre-tax profit was up US$4.7 billion for 2009, or 56 percent at US$13.3 billion. [ID:nWLB8680]

Its unit Hang Seng Bank (0011.HK) rose 1.2 percent to its highest close in about six weeks. The bank reported a 6.2 percent drop in 2009 profit to HK$13.22 billion (US$1.7 billion), against consensus forecast of HK$13.29 billion. [ID:nHKF002169]

Investors snapped up Chinese bank shares on expectations that China's National People's Congress, to be held later this week, might reaffirm an appropriately loose monetary policy despite recent official liquidity tightening steps, brokers said.

Top lender ICBC (1398.HK) rose 5.1 percent to end at a one-month closing high. China Construction Bank (0939.HK) (601939.SS), the country's second-largest bank by assets and the most actively traded stock, rose 4.1 percent as investors bought the stocks following Chairman Guo Shuqing's comment the bank has no plans to raise fresh capital. [ID:nBJA002227]

Turnover increased to HK$67.97 billion ($8.7 billion) from Friday's HK$54.19 billion.

The China Enterprises Index .HSCE of top locally listed mainland Chinese stocks closed up 3.2 percent at 11,913.45, its highest close in more than five weeks.

Chinese copper mining stocks rallied as copper prices hit five-week highs on supply worries after a massive earthquake hit top producer Chile. [ID:nTOE620035] Jiangxi Copper (0358.HK) rose more than 7 percent to HK$16.90 in Hong Kong, its highest in five weeks, before ending at HK$16.72, up 5.8 percent. Smaller rival Xingye Copper (0505.HK) was up 8.2 percent.

Brokers said investors were covering their short positions, while generally firmer commodities prices also gave support to mining shares. Zijing Mining (2899.HK) was up 2.7 percent and Chalco (2600.HK) rose 3.6 percent.

Copper futures jumped to their highest in more than five weeks on Monday after a massive earthquake in top producer Chile sparked supply worries and lingering threats could push the metal to a new 2010 peak. [ID:nSGE62000O]

SHANGHAI RISES AHEAD OF PARLIAMENTARY MEETING

China's key stock index rose 1.18 percent on Monday to its highest close in five weeks, led by copper miners, as a sharper-than-expected slowdown in China's manufacturing sector boosted expectations this month's Chinese parliamentary session would reaffirm a relatively loose monetary policy.

The Shanghai Composite Index .SSEC ended at 3,087.842 points, its highest close since Jan. 25 and continuing a 2.1 percent rally in February, driven in part by bargain-hunting after the previous month's 8.8 percent slide.

Copper mining stocks jumped as copper prices rose on supply worries after an 8.8-magnitude earthquake in top producer Chile, with Jingcheng Copper 002171.SZ, one of Monday's top gainers, surging its 10 percent daily limit to 15.50 yuan.

Many other copper stocks also jumped their 10 percent daily limit, with Yunnan Copper 000878.SZ surging to 28.05 yuan, Jiangxi Copper (600362.SS) to 38.54 yuan and Tongling Nonferrous Metals Group (000630.SZ) to 20.47 yuan.

Gaining Shanghai stocks overwhelmed losers by 738 to 150 as trading focused on small-cap shares. Turnover rose to a decent 131 billion yuan ($19 billion) from Friday's 121 billion yuan.

The index stood above the 125-day moving average, now at 3,077 points, for the first time since late January, indicating market sentiment had improved, analysts said.

Despite Monday's rise, the Chinese market has generally been weak so far this year amid worries about heavy supplies of new shares and an official clampdown on excessive bank lending.

Analysts warned against excessive optimism about the near-term trend as the supply of liquidity in the market had decreased after official quantitative tightening over the past two months.

"Supervision of bank lending has been greatly enhanced, effectively cutting off funds that flowed improperly into the market via grey-area channels," said Zheng Wengang, head of investment at Shanghai Securities.

"With less market liquidity, you cannot expect a bull run, nor a strong rally in index heavyweights," he said. "So the index should still move in a relatively narrow range."

The official Purchasing Managers' Index, the first set of Chinese economic data announced for February, fell to 52.0 from 55.8 in January, well below the median forecast of 55.45 in a poll by Reuters of 10 economists. [ID:nTOE62001T]

"The PMI data indicates that the manufacturing sector still has some way to go before it recovers fully from the global financial crisis," said a trader at a major Chinese brokerage in Shanghai.

"It gives a boost to the market's belief that the government will reiterate its appropriately loose monetary policy for 2010 at the parliamentary session."

The annual session of the National People's Congress, China's parliament, will begin on Friday. Premier Wen Jiabao will deliver his work report on that day, which investors expect to reaffirm an official policy of relatively easy money in place since 2008. ($1 = 6.83 yuan) (Editing by Jacqueline Wong)