China shares rise on economic optimism; HK falls

* Shanghai market rises on economic optimism

* Hong Kong stocks succemb to profit taking

* Trinity, other debutants up in Hong Kong and China
(Updates to midday)

By Jun Ebias and Claire Zhang

HONG KONG/SHANGHAI, Nov 3 (Reuters) - China's key stock index
rose 1.3 percent in active trade on Tuesday, as growth in bank
lending lifted optimimism for sustained economic growth, while in
Hong Kong stocks were hit by profit taking.

The Shanghai Composite Index .SSEC ended the morning at
3,116.686 points. Gaining Shanghai A shares outnumbered losers by
805 to 82, while turnover picked up to 96 billion yuan ($14
billion) from Monday morning's 71 billion yuan.

The Nasdaq-style ChiNext <0#CHINEXT.SZ> market for start-up
stocks, which began trade last Friday, weakened for a second day,
after two-thirds of its 28 stocks fell by their 10 percent daily
limit on Monday.

Analysts said that as ChiNext trade became more rational,
some funds would flow back to the main board.

"Investors are actively buying because of the outlook for
economic recovery and ignored China Merchants Securities' IPO,"
said Chen Jinren, senior analyst at Huatai Securities in Jiangsu.
"The index has performed strongly in the last two days."

China Merchants Securities said it would launch an IPO this
week that could be worth at least 10 billion yuan ($1.5 billion).
It will start book building on Wednesday, adding to a series of
brokerage IPOs. [ID:nSHA150277]

Brokerage shares were firmer, with CITIC Securities
(600030.SS) up 2.29 percent at 28.20 yuan.

The official China Securities Journal cited a research report
from China Construction Bank forecasting that China's economic
growth in the fourth quarter was likely to exceed 10 percent on
year, with full-year GDP growth seen at 8.3 percent.

The newspaper also reported that China's top four state-owned
commercial banks extended about 136 billion yuan in new loans in
October, up 23 percent from a month earlier. [ID:nSHA151278]

Another major official newspaper, the Shanghai Securities
News, said new bank lending in China may have hit 300 billion to
400 billion yuan in October, broadly in line with market
expectations. [ID:nPEK349957]

Metals shares were strong, with Shandong Gold (600547.SS)
jumping 3.87 percent to 69.05 yuan as gold prices neared record
highs.

Two companies made strong debuts in Shenzhen, with Xinjiang
West-Construction 002302.SZ up 94 percent from its IPO price to
29.08 yuan, while Shenzhen MYS Environmental Protection and
Technology 002303.SZ climbed 41 percent to 35.78 yuan.

HONG KONG FALLS

The benchmark Hang Seng Index .HSI was down 0.71 percent,
or 154.28 points, at 21,465.91 at midday. Turnover was HK$33.10
billion ($4.3 billion), versus midday Monday's HK$36.66 billion.

"The market is retreating and investors are taking profit,"
said Jackson Wong, investment manager at Tanrich Securities.
"There is more downside at this point because we seem to have run
out of major factors to prop up the market."

Some investors were also waiting for the outcome of the U.S.
Federal Reserve meeting and U.S. October jobs data later this
week, before making more bets in the market, Wong said.

"The market needs more data to validate expectations that the
global economy is recovering quicker," he added.

Bucking the trend, Swire Pacific (0019.HK) advanced 3.21
percent. The aviation-to-property conglomerate said on Monday
that it was considering a separate main-board listing for
property unit Swire Properties Ltd. [ID:nHKG129751]

Bank of America Merrill Lynch raised its rating on Swire
Pacific to "buy" from "underperform" because of the possible
unlocking of value through a spinoff of its property division.

Index heavyweight HSBC Holdings (0005.HK) was up 0.23
percent. Europe's biggest bank is preparing to boost its China
presence by about 20 percent next year as it ramps up for an IPO
in one of its fastest growing markets. [ID:nTP125937]

Fashion retailer Trinity Ltd (0891.HK) surged 63 percent on
its trading debut in Hong Kong.

DVN (Holdings) (0500.HK) rallied 10.53 percent. Cisco Systems
(CSCO.O) has agreed to buy the set-top box business of Hong
Kong-based DVN for as much as $44.5 million. [ID:nN02467916]

Hong Kong property developers extended losses on concern a
government move to curb fast-rising property prices may squeeze
earnings. Sino Land (0083.HK) fell 2.45 percent and Sun Hung Kai
Property (0016.HK) was down 2.21 percent.

The China Enterprise Index .HSCE of top locally listed
mainland Chinese stocks was down 0.49 percent at 12,679.26.

Agile Property (3383.HK) fell 2.13 percent. The Chinese
property developer will issue four-year non-callable
dollar-denominated bonds, a source said. [ID:nHKG153147]

Other Chinese developers listed in Hong Kong also slid.
Shimao Property Holdings (0813.HK) fell 2.72 percent and China
Overseas Land (0688.HK) shed 2.59 percent.

Fitch Ratings said China's red-hot property market was a
concern for its sovereign credit rating because of the threat of
worsening asset quality in the banking system. [ID:nHKG156094]

Tencent Holdings (0700.HK) fell 3.14 percent to profit
taking, retreating from a gain of as much as 5.4 percent on
Monday.
(Editing by Chris Lewis)