HK, China shares in weak finish to big 2nd quarter

* HK shares mark best quarter in 15 years

* China shares tack on 63 percent in first half

* Sinopec gains after China's surprise fuel price increase (Updates to close)

By Parvathy Ullatil and Claire Zhang

HONG KONG/SHANGHAI, June 30 (Reuters) - Hong Kong shares finished their best quarter in more than 15 years with a whimper on Tuesday, as investors locked in some of the gains made during a stellar four-month rally that began in March.

The index tacked on 35.4 percent in its biggest quarterly advance since the Oct.-Dec. period in 1993 when low interest rates in the U.S. and China's economic awakening drove investors into Asia's high-growth "tiger" economies.

Chinese stocks snapped a four-day winning streak on Tuesday, as steel and auto shares fell, but they added a quarter to their value in the second quarter fuelled by signs of economic recovery and ample liquidity in the financial markets.

But the strong rebound in share valuations, which has outstripped the recovery in real economic activity, has made analysts cautious about the market's prospects in the second half.

"Investors wouldn't dare be too optimistic about first-half earnings, while the pace of IPOs will also be in focus in the third quarter," said Western Securities analyst Cao Xuefeng.

Market watchers also expect new lending in China, which soared to 7 trillion yuan ($1.025 trillion) in the first half of the year and were a key driver of the stock market gains, to ease in the rest of the year.

SINOPEC GAINS IN HONG KONG

The benchmark Hang Seng Index finished down 0.81 percent at 18,378.73, but tacked on 1.1 percent in its fourth straight month of gains in June.

The 42-stock gauge rose 27.7 percent in the first half, buoyed by signs of a likely early recovery in the Chinese economy, and is valued at 16.5 times estimated earnings in 2009, compared with less than 10 times at the beginning of the year.

"What we saw was the reversal of the panic selling in the fourth quarter of 2008, with central governments across the world doing the right thing. But from here on it is a lot harder to see where we are headed," said Winson Fong, managing director with SG Asset Management in Hong Kong.

The China Enterprises Index, which represents top locally listed mainland Chinese stocks, slipped 0.2 percent to 10,962.61.

Oil refiners outperformed after China increased gasoline and diesel prices for the third time since late March to their highest levels ever. [ID:nPEK4425]