China firms lead HK stocks up 1.6 percent

* Chinese enterprises lead gains on hope of stimulus package

* Power stocks fall on profit-taking after tariff hike

* Property stocks firm ahead of Cheung Kong results (Updates to mid-day)

HONG KONG, Aug 20 (Reuters) - Hong Kong shares recovered from early losses with the benchmark index surging 1.56 percent on Wednesday amid hopes of a stimulus package to aid fragile mainland stock markets, bucking weak sentiment in the region.

Chinese finance and insurance stocks advanced, with China Life (2628.HK) climbing 3.4 percent, China Construction Bank (0939.HK) up 3.4 percent and ICBC (1398.HK) up 2.4 percent.

"Its a good time to bargain-hunt as many stocks have already fallen to an attractive level," said Francis Lun, general manager from Fulbright Securities.

China's leaders are carefully considering an economic stimulus package of 200 billion yuan ($29.13 billion) to 400 billion yuan and may ease monetary policy by the end of the year, investment bank JPMorgan Chase said on Tuesday.

"We are all waiting for a miracle," Lun said.

The Hang Seng Index .HSI rose to as high as 20,909.79 before it ended the morning session 319.10 points up at 20,803.47. The index opened 0.47 percent lower.

"Even though investors are not sure how effective the measures can be, they have higher hopes that (the central government) will come up with measures to aid the markets," said Alfred Chan, chief dealer at Cheer Pearl Investment.

Mainboard turnover by midday increased to HK$33.42 billion ($4.3 billion) from Tuesday's HK$24.3 billion for the same period.

The China Enterprises Index .HSCE of top locally-listed mainland surged 3.39 percent after opened down 0.22 percent, tracking a nearly 6 percent rise in China's Shanghai benchmark index .SSEC.

However, power stocks fell after Beijing announced its second power tariff hike in two months, prompting investors to take profits. Huaneng Power (0902.HK) (600011.SS) (HNP.N), China's top electricity provider, fell 5.03 percent. Smaller rival Datang Power (0991.HK) (601991.SS), which dropped 5 percent early this morning, slid 0.83 percent at midday. Huadian Power (1071.HK) (600027.SS) fell 7.1 percent.

China is raising on-grid power tariffs for thermal generators by 0.02 yuan per kilowatt hour, or about 5 percent, the second rise in less than two months, the government said on Tuesday, as Beijing seeks to ease the worst power crisis in four years.

Property stocks were firm ahead of Cheung Kong's (0001.HK) first half earnings on Thursday. Cheung Kong rose 1.6 percent, while Hong Kong's largest property developer, Sun Hung Kai Properties (0016.HK), gained 0.77 percent. Sino Land (0083.HK) also rose 3.5 percent.

Tsingtao Brewery Co Ltd (0168.HK) soared 7.6 percent after China's best-known beer brand posted a 41.9 percent rise in first-half profit despite soaring raw material prices. Merrill Lynch later upgraded Tsingtao (600600.SS) to buy from underperform after the better-than-expected interim results.

Shares in PICC Property & Casualty (2328.HK), China's top non-life insurer, recovered from early losses to rise nearly 4 percent. The firm reported a loss for the first half of the year as natural disasters in China drove up catastrophe claims.

Shares of China National Building Material (3323.HK) jumped more than 14 percent to as high as to HK$11.52 before finishing the morning at HK$11.36. The Chinese cement group said it expected its first half profit to rise substantially due to an increase in revenue from cement and engineering services.

Shenzhen Investment Ltd (0604.HK) fell 7.3 percent after the Chinese property firm warned of a substantial fall in first-half profit on declining property price and transaction volume under China's credit tightening measures. (US$1=HK$7.8) (Reporting by Donny Kwok; editing by Jonathan Hopfner)