HK, China shares push ahead on recovery hopes

* HK shares finish off 8-month high on profit taking

* Metals, shipping shine in HK on demand recovery hopes

* Properties, banks strong in Shanghai amid ample liquidity (Updates to close)

By Parvathy Ullatil & Claire Zhang

HONG KONG, June 3 (Reuters) - Hong Kong shares rose 1 percent on Wednesday after upbeat U.S. housing sales data drummed up hopes for an economic recovery, but profit-taking pressure persisted following the market's blazing rally in May.

China-listed shares rose for a fourth straight day, piling on 2 percent to end at a 10-month high, buoyed by strong liquidity in the mainland market even as new lending in May slowed.

Concern over stretched valuations hounded both markets following steep a ascent since early March.

In Shanghai, Haitong Securities analyst Zhang Qi warned that the market's rapid rise could leave it vulnerable to profit taking, especially if it encouraged the authorities to proceed quickly with a plan to resume IPOs after an eight-month halt.

"The faster the index rises, the sooner IPOs might restart," he said.

China's stock regulator said in late May that it could resume IPOs at any time following a period to obtain feedback on a new set of draft IPO rules, which ends on Friday.

The benchmark Hang Seng Index .HSI closed up 187.39 points at 18,576.47.

The main index fell off an eight-month high of 18,967.39 as heavyweight HSBC (0005.HK) succumbed to profit taking in late trade, after European markets commenced trading. [ID:nL3309625] The stock which added a quarter to its market value in May dropped 1.8 percent to HK$66.85.

The China Enterprises Index .HSCE of top mainland companies rose 1.8 percent to 10,825.20.

"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$90.6 billion compared with HK$101.9 billion on Tuesday.

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.