HK shares at 11-month closing high; China stocks slip

* HK shares finish at 11-month closing high

* China shares drift down as caution prevails

* A share/H share premium gap narrows to 2 month closing low

By Parvathy Ullatil and Claire Zhang (Updates to close)

HONG KONG/SHANGHAI, Aug 10 (Reuters) - Hong Kong shares recouped last week's losses as stocks across the board surged on better-than-expected U.S. data, but China stocks edged lower amid investor caution over possible changes to the country's easy monetary policy.

Chinese bank stocks, which were sold down in recent sessions, recovered in Hong Kong on expectations of earnings upgrades from investment houses as the lenders begin reporting their first-half results in coming weeks.

The premium gap between yuan-denominated A-shares and their Hong Kong-listed counterparts finished at its lowest level -- 34.2 percent -- in nearly two months

CHINA BANK STOCKS JUMP IN HONG KONG

The benchmark Hang Seng Index .HSI finished up 2.72 percent or 554.15 points at 20,929.52, its highest closing level since September 2008, but turnover slowed to HK$71.4 billion from Friday's HK$93.6 billion.

The index failed to hold above the 21,000-point level for the second time this month, as the over 21 times valuation on blue chips made investors wary.

"Funds are still seeking out aggressive investment options and the U.S. jobs data was a good catalyst. But the index will continue to be rangebound between 20,400 points and 21,200 points," said Patrick Yiu, associate director with CASH Asset Management.

The gauge dropped 1 percent last week, snapping a three-week rally on worries the easy money days in China might end despite official comments from the mainland that sought to reassure investors.

China Construction Bank (0939.HK) was up 4 percent, after dropping 8 percent last week on talk of likely monetary tightening on the mainland, while top lender ICBC (1398.HK) gained 3.1 percent.

"Talks of tightening are excuses for short-term profit-taking. We recommend buying on weakness," Jasmine Lai, banking analyst with DBS Vickers said on Monday.

The China Enterprises Index .HSCE, which represents top locally listed mainland Chinese stocks, was up 2.5 percent at 11,901.65.

MTR Corp (0066.HK) jumped 6.2 percent to HK$28.35 with first-half earnings, due Tuesday, at Hong Kong's subway operator expected to remain resilient despite the downturn in the local economy. Revenue from MTR's rail operations is likely to come in more or less stable, helping to soften the blow to its property business.

Harbin Power Equipment (1133.HK) fell 1.5 percent to HK$8.58 after the company recorded a 61.38 percent year-on-year drop in first-half profit on higher product costs, thinner profit margins and an increase in provisions for impairment losses on assets.

SHANGHAI STOCKS CONSOLIDATE GAINS

Chinese stocks fell 0.34 percent in light trade on Monday to their lowest close in three weeks, with property and financial shares soft as sentiment remained cautious after last week's slump on worries over a possible tightening of liquidity.

The Shanghai Composite Index .SSEC closed down 10.93 points at 3,249.760 points, slipping for a fourth session in a row but managing to bounce smartly from its afternoon lows in late trade after nearly touching 3,200 points.

Gaining Shanghai A shares outnumbered losers by 560 to 362, however, while turnover for Shanghai A shares dropped to 152.6 billion yuan ($22.3 billion), the lowest since June, from Friday's 184.3 billion yuan.

The index appeared to find technical support after beaching its 30-day moving average for the first time since late May.

"The index is in a consolidation phase with light turnover. Investors are waiting to see whether tomorrow's data is upbeat and might encourage some funds to flow into the market, although the index has already been reflecting optimism over the economic recovery," said Nanjing Securities analyst Wen Lijun.

China's monthly economic data for July, due for release on Tuesday, is likely to provide further evidence that the world's third-largest economy is recovering with the help of a government stimulus programme. [ID:nSP486673]

Analysts said sentiment had failed to get a sustained boost from a reaffirmation of the government's loose monetary stance over the weekend, when Chinese Premier Wen Jiabao said the mix of active fiscal policy and relaxed monetary policy must stay in place while economic growth faced challenges from domestic and external weakness. [ID:nPEK220133]

Much of the good news about the economic recovery, moreover, has already been factored into the market, which rose 91 percent from the start of the year to a 14-month intraday peak of 3,478 points at the middle of last week.

The index pulled back after official comments that China would fine-tune its monetary policy, interpreted as suggesting a potential tightening of market liquidity and adding to signs that new bank lending would fall sharply from the record pace of the first half while facing stricter controls.

Tang Yonggang, chief strategist at Hongyuan Securities, believed the index was close to forming a short-term floor but would struggle to move higher this month because of massive profit-taking pressure after this year's strong rally.

The "fine-tuning" comments, he said, were just a convenient trigger for an inevitable sell-off.

Financial and property shares were weak, with developer China Vanke (000002.SZ) losing 1.65 percent to 12.54 yuan. Ping An Insurance (601318.SS) sank 1.97 percent to 55.62 yuan.

China State Shipbuilding (600150.SS) slid 6.12 percent to 87.27 yuan after saying over the weekend that its net profit in the first half of 2009 dropped 38 percent, with no new ship orders during the period. (Editing by Edmund Klamann and Chris Lewis)