Hong Kong shares edge higher, but gains seen as fragile

(Updates to midday)

* HSI up 0.3 pct, CSI300 down 0.9 pct

* Turnover on both bourses weak, investors stay cautious

* China Mobile, HK utilities among gainers

* Evergrande recovers some of last week's slump

By Clement Tan

June 25 (Reuters) - Hong Kong shares crept higher on Monday, with defensive plays such as China Mobile helping the Hang Seng Index outperform Asian peers, but lackluster turnover pointed to lingering caution among investors.

Italian and Spanish debt auctions on Tuesday, along with a slew of economic from data from major European economies, the United States and China could provide fresh impetus for investors later this week.

Mainland Chinese markets were weaker at the resumption of trade after a 3-day holiday weekend. The Shanghai Composite Index slipped 0.6 percent at midday, while the large cap-focused CSI300 was down 0.9 percent at 2490.8.

The China Enterprises Index of the top Chinese listings in Hong Kong slipped 0.4 percent.

The Hang Seng Index closed up 0.3 percent at 19,090.1, above the day's lows and bouncing off the 50 percent Fibonacci retracement of its rise from October lows to February highs, at about 18,963.

"Things might be cheap, but growth is deteriorating at too fast a speed for value investors to justify getting into the market now," said Benjamin Chang, chief executive officer of Hong Kong-based LBN Advisors, which manages more than $400 million of assets in two China funds.

On Monday, shares of China Mobile rose 2 percent to June 20's month-high at HK$82.80. A close above this level in strong volume could point to further gains in the near term.

Strength in other defensive sectors, such as Hong Kong utilities, also helped the Hang Seng Index eke out gains. Power Assets gained 1.6 percent to cut losses, leaving it down 1 percent in 2012 after two straight annual gains.

Power Assets outperformed last year as the broader market tanked, with investors choosing the relative safety of its earnings. With the global macro situation unlikely to change too dramatically any time soon, that trend could resume.

In a note to clients on Monday, Bank of Communications (BoComm) International Securities said the divergence between the performance of cyclicals and defensive sectors in Hong Kong has "once again reached an extreme."

Hong Hao, BoComm's chief strategist, added that it is now "time for a change" of sector leadership, warning that rising earnings estimates of cyclicals also suggest that these stocks have largely priced in the reflation in China, and "thus warrant caution."

EVERGRANDE RECOVERS, CHINA PROPERTY FIRMER

Evergrande Real Estate led strength in the Chinese property sector. It rose 4.4 percent in strong volume, recovering some of its 17 percent losses last week after a short seller accused it of fraud, bribery and financial irregularity.

China's second-largest developer by sales last Friday said it may buy back some of its shares and take legal action against Citron Research for allegations it made in a report late last week.

Evergrande's strength spurred broad gains in the sector. China Overseas Land & Investment rose 3.1 percent, while China Resources Land gained 1.8 percent.

Chinese computing giant Lenovo Group Ltd slipped a further 3.3 percent on Monday after falling 8 percent last week following a Taiwanese newspaper report alleged that it had halved its projection for growth in personal computer shipments.

On Friday, the company denied those allegations, but on Monday the stock fell to its lowest since May 31. (Editing by Richard Borsuk)