* HSI flat, H-shares -0.8 pct, CSI300 -0.4 pct
* Angang Steel jumps after profit alert, JPM upgrade
* China property developers extend rally on curb relief
* Zoomlion slumps after 2012 earnings missed expectations
By Clement Tan
HONG KONG, April 2 Hong Kong shares were flat on Tuesday as markets reopened after a break for Easter, weighed down by lingering weakness in the mainland Chinese market and underwhelming U.S. data.
The Chinese property sector extended gains after the official Shanghai Securities News reported on Tuesday that the central bank will not require local lenders to raise mortgage rates uniformly to curb housing prices.
At midday, the Hang Seng Index was up less than 0.1 percent, while the China Enterprises Index of the top Chinese listings in Hong Kong was down 0.8 percent.
The Shanghai Composite Index and CSI300 of the leading Shanghai and Shenzhen A-share listings each ended a choppy morning session down 0.4 percent. The CSI300 is now at its lowest since late December.
China markets will be shut on Thursday and Friday for a public holiday, while Hong Kong is closed on Thursday.
"I think investors will remain broadly cautious this week and most of April," said Larry Jiang, chief investment strategist at Guotai Junan International Securities.
"May has not been a good month historically, but with China data looking like it will continue to underwhelm, some will be thinking of beating the market before any sell-off next month," Jiang added.
Chinese banks were among the top drags on Hong Kong indexes after China's official manufacturing purchasing managers' index came in on Monday at 50.9, an 11-month high but below a 52.0 Reuters poll consensus.
Industrial and Commercial Bank of China (ICBC) slid 1.8 percent on Tuesday, while Agricultural Bank of China (AgBank) shed 1.9 percent and Bank of China declined 1.4 percent.
Chinese pharmaceutical stocks were among the major drags in the onshore market after the official Economic Information Daily newspaper reported that drug price reforms may hurt the profits of pharmaceutical distributors.
Zhejiang Hisun Pharmaceutical Co Ltd tumbled 6 percent in Shanghai and Beijing SL Pharmaceutical Co Ltd dived 7.4 percent in Shenzhen.
INDUSTRIAL RECOVERY IN CHINA?
Angang Steel was an outperformer in Hong Kong, jumping 9.7 percent after the Chinese steel producer said on Friday it expects to have swung from losses to profits in the first quarter.
JP Morgan analysts upgraded their tactical view on Angang's Hong Kong listing from "neutral" to "overweight", citing the company's cost cutting measures as a positive surprise. They also upped their target price by more than 40 percent.
But in a sign of the patchy recovery in China's industrial sectors, Zoomlion Heavy Industry plunged 9.8 percent after missing expectations with its 2012 final results late on Thursday, which triggered a slew of brokerage downgrades.
Shares of China Vanke in Shenzhen were headed for a third-straight gain, having climbed 2.2 percent at midday, following more signs that the fresh curbs on home sales will not be not as draconian as previously feared.
Measures announced over the weekend by several cities were seen weaker than expected after the central government said in early March that local governments must strictly enforce a 20 percent capital gains tax and higher downpayments for second-home buyers in areas where property prices are rising too quickly.