HK, China shares continue rally on recovery hopes

(Updates to midday)

HONG KONG, June 3 (Reuters) - Hong Kong shares rose 2.3 percent on Wednesday, clawing back some ground lost in the previous session, after data showed U.S. pending home sales for April grew, sparking hopes for economic recovery.

China-listed shares rose for a fourth straight session, buoyed by still-strong liquidity in the mainland market even as new lending in May slowed.

Here are the index moves and top stock moves by midday-

HONG KONG

* The benchmark Hang Seng Index .HSI was up 2.3 percent at 18,808.77 after dropping 2.6 percent on Tuesday as investors locked in gains from the recent rally.

* "Some of these stocks will look overstretched if you look at the 2009 earnings estimates, but for emerging markets we are looking at the recovery potential and growth potential for 2010 onwards," said Andrew Gillan, an investment manager with Aberdeen Asset Management Asia.

* Turnover on the exchange was HK$44.9 billion, from HK$54.8 billion by midday Tuesday.

* The China Enterprises Index .HSCE of top mainland companies was up 2.8 percent at 10,930.31.

* Bulk shippers hit the spotlight after the key gauge for measuring changes in sea freight surged 11.5 percent overnight. The Baltic Dry Index .BADI jumped to an eight-month high, propelled by increased Chinese imports of iron ore.

* China Cosco (1919.HK),the country's biggest shipping conglomerate, rose 5.3 percent, while another bulk shipper China Shipping Development (1138.HK) tacked on 8.7 percent.

* Telecom equipment maker ZTE (0763.HK) jumped 6.4 percent to HK$28.10 after Citigroup raised its rating on the stock to "buy" with the company tipped to be a major beneficiary of increased capital spending by Chinese telecom companies in new networks.

Citigroup increased its target price on the stock to HK$33 from HK$18.46.

* Data showing slowing loan contraction, ample liquidity in the money system and improving home sales amid the low interest rate environment spurred another round of buying in local banking counters with Hang Seng Bank (0011.HK) leading the pack.

* Shares in the HSBC unit rose 6.5 percent, while Bank of China's (3988.HK) local arm BOC Hong Kong (2388.HK) gained 5.6 percent. Bank of East Asia (0023.HK), the smallest of the three, advanced 6.4 percent.

SHANGHAI