HK, China shares jump as financials rally

(Updates to midday)

HONG KONG/SHANGHAI, June 22 (Reuters) - Financial stocks perked up in Hong Kong and China, lifting the broader markets on Monday, boosted by two items of positive news.

Late on Friday, China said state-owned companies that sold shares after the government initiated share-structure reforms in late 2005, and those that would do so in future, must give a 10 percent stake for free to the national pension fund.

Stakes in major state companies including China Construction Bank (0939.HK), China Life Insurance Co (601628.SS)(2628.HK) and Ping An Insurance (2318.HK) (601318.SS) will be held by the pension fund for at least three years. [ID:nSHA73873]

"What this says is that the Chinese government will continue to do its bit towards supporting the market and stimulating the economy, which in turn will benefit their banks and insurers," said Sun Hung Kai Financial strategist Castor Pang.

Seperately, the official Shanghai Securities News cited unidentified bank officials as saying that new lending in China in the first half of this year may reach 6.5 trillion yuan ($951.1 billion), as loan growth accelerated in June on new infrastructure projects. [ID:nSHA170933]

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

HONG KONG

* The benchmark Hang Seng Index .HSI was up 2.5 percent at 18,373.08, after opening flat, led by a 2.5 percent jump in index laggard China Mobile (0941.HK).

* Two initial public offerings in Hong Kong -- a scrap-metal recycler and a furniture maker -- drew strong interest on their debuts on Monday in a market seeking fresh catalysts ahead of mid-year reports by fund managers.

* Turnover rose to HK$37.1 billion from HK$31.5 billion by midday Friday.

* The China Enterprises Index .HSCE, which represents top locally listed mainland Chinese stocks, was up 3 percent at 10,822.07.

* Top lender ICBC (1398.HK) was up 3.9 percent and Bank of Communications (3328.HK) jumped 7 percent to HK$7.96. China's No.2 lender Bank of China (3988.HK) advanced 3.7 percent to HK$3.62.

* New listing China Metal Recycling (0773.HK) jumped at the start of trade with a 21.6 percent gain to HK$6.30 from its IPO price of HK$5.18. The stock hit a high of HK$6.52 then trimmed the gains to HK$6.44 by the end of the morning session.

* The other debutante, furniture maker Hing Lee (Hong Kong) (0396.HK), hit a high of HK$1.58, against an IPO price of HK$1.02, before easing to HK$1.46 by midday.

* Greentown China (3900.HK) rose 2.9 percent to HK$11.36 after the Chinese property company declared a special dividend of 0.18 yuan per share following completion of its offer of 9 percent senior notes maturing in 2013.

* Sino-Ocean Land Holdings (3377.HK) jumped 5 percent to HK$8.35 after the Chinese property developer became the first red-chip company to tap the mainland Chinese bond market to raise funds.

The Chinese property developer said it had received regulatory approval for a corporate bond issue in China to raise 2.6 billion yuan ($380.3 million) to fund property development projects, repay debt and for working capital.

SHANGHAI

* The Shanghai Composite Index .SSEC ended the morning up 0.91 percent at 2,906.623 after hitting a nearly 11-month intraday high of 2,917.208.

* But losing Shanghai A shares outnumbered gainers by 455 to 436, while turnover in Shanghai A shares rose to 81.1 billion yuan ($11.9 billion) from Friday morning's 78.9 billion yuan.

* "An additional three-year lock-up for IPO shares and strong first-half new lending lifted the index to a new high, and the index is likely to challenge 3,000-point mark," said Huatai Securities analyst Chen Jinren.

* Both items of news came out after the government allowed the resumption of IPOs last week, suggesting its intention to stabilise the market, analysts said.

* The index rose 0.93 percent on Friday after China resumed initial public offerings following a nearly 10-month suspension, starting with a small IPO.

* Financial shares led Monday's gains. Bank of Nanjing (601009.SS) jumped 8.66 percent to 17.31 yuan, while Bank of China (601988.SS) advanced 3.96 percent to 4.46 yuan. Ping An Insurance (601318.SS) climbed 4.45 percent to 47.19 yuan.

* Steel shares were strong with Baoshan Iron and Steel (600019.SS) advancing 3.31 percent to 6.87 yuan. Chinese spot steel prices rose to a near four-month high last week as demand recovered. (Reporting by Parvathy Ullatil in HONG KONG & Claire Zhang in SHANGHAI; Editing by Chris Lewis)