* HSI +0.3 pct, H-shares +0.4 pct, CSI300 +0.3 pct
* CR Power surges, 2012 earnings trigger broker upgrades
* Rally in China IPPs on falling coal prices vulnerable to correction
By Clement Tan
HONG KONG, March 19 (Reuters) - Hong Kong and China shares rebounded modestly on Tuesday from hefty losses in the previous session, led by Chinese power producers after positive earnings reports extended a rally in the sector.
Gains came in weak turnover, however, pointing to lingering caution over a radical bailout plan for Cyprus which was set to face a parliamentary vote later in the day, and as investors await more policy cues from the new Chinese government.
The Hang Seng Index went into the midday trading break up 0.3 percent, after closing on Monday at its lowest since Dec. 4. The China Enterprises Index of the leading Chinese listings in Hong Kong edged up 0.4 percent.
The CSI300 of the top Shanghai and Shenzhen A-share listings was up 0.3 percent. The Shanghai Composite Index rose 0.2 percent in midday volume that neared 2013 lows after China's central bank drained 39 billion yuan from the money markets on Tuesday.
"This rally in Chinese IPP (independent power producers) share prices on declining coal prices is a theme that has been played for a long time and a short-term correction could be due," said Wang Aochao, UOB-Kay Hian's Shanghai-based head of research.
"They could be vulnerable to a correction in the next beta rally or to any coal price increases, particularly since some of the coal producers are trading at pretty attractive valuations after recent losses," Wang added.
Shares of China Resources Power (CR Power) surged 7.4 percent in Hong Kong to their highest in two weeks after some brokerages upgraded their target prices for the stock following positive 2012 earnings.
Analysts at Deutsche Bank raised their target price for CR Powe by some 14 percent, citing the company's superior execution and its strongest capacity for organic capacity growth among sector peers.
CR Power's gains lifted the sector. Huaneng Power climbed 4.7 percent in Hong Kong and 2.9 percent in Shanghai ahead of its 2012 final earnings report later in the day.
CR Power has gained nearly 14 percent so far this year, and is trading at an 8 percent discount to its forward 12-month earnings multiple, according to Thomson Reuters StarMine. This compares to the 20 percent discount Huaneng is trading at after rising 12 percent this year.
In the last 30 days, 6 of 26 analysts have downgraded their full-year 2012 earnings-per-share estimates for Huaneng by an average of 3 percent.
Both Chinese power producers have risen even as benchmark indexes have reversed yearly gains. The Hang Seng Index is now down 2.2 percent, while the China Enterprises Index has sunk more than 5 percent in 2013.
China Shenhua Energy, the country's biggest coal producer, shed 1.1 percent in Hong Kong. It will post 2012 earnings on March 22.
It has slipped 1 percent so far this year and is trading at a 26 percent discount to its historical median forward 12-month multiple, according to StarMine.