* HSI +1.2 pct, H-shares +1.8 pct, CSI300 +1.3 pct
* Chinese carmakers up on more policy support for 'green' cars
* Aluminum Corp hits 7-month high on high global prices
* Property developers extend rally on more easing expectations (Updates to midday)
By Grace Li
HONG KONG, July 22 Hong Kong's benchmark index reached its highest level in more than seven months early on Tuesday, leading gains in Asia, as recent fund inflows pushed up the territory's blue-chip stocks.
Also pushing up the index were moves by investors to cover their short positions in the absence of negative news from China.
China shares unexpectedly posted solid gains ahead of a deluge of initial public offerings, with volumes robust as sectors from banking to property all strengthened.
By midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings rose 1.3 percent to its highest since June 16, while the Shanghai Composite Index was up 1.0 percent at 2,074.30 points.
The Hang Seng Index gained 1.2 percent at 23,667.46 points, its highest since Dec. 11. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 1.8 percent. If that gain remains, the index will have its best day in four months.
"U.S. stock prices are reasonable but a bit more expensive, so more and more funds are looking for other opportunities," said Larry Jiang, chief strategist at Guotai Junan International in Hong Kong.
"Hong Kong can be a target. As long as investors think the companies have good results or fundamentals, money will flow in," he added.
Among top index boosts on the Hang Seng, Tencent Holdings added 1.7 percent, partly lifted by peer Baidu's record high close in New York.
Chinese carmakers jumped again, riding another policy announcement on Monday about promoting electric and plug-in hybrid cars. The sector had seen solid gains recently, helped by a tax exemption and a requirement for government officials to use more "green" vehicles by 2016.
BYD surged 5.8 percent in Shenzhen and 3.7 percent in Hong Kong. SAIC Motor Corp rose 3.1 percent to its highest since March 2013.
Some metal firms soared as London zinc rose for a second session to hit a near three-year high on Tuesday and aluminium touched a new 16-month peak.
Aluminum Corp of China jumped 5.6 percent and touched a seven-month high while Yunnan Luoping Zinc & Electricity surged the maximum allowed 10 percent.
Chinese property developers extended gains after media reports said more cities have relaxed restrictions on house purchases. Poly Real Estate added 2.8 percent and China Vanke 2.2 percent.
Mid-sized banks, which are more reliant on short-term interbank funding, were the biggest CSI300 boosts, with China Merchants Bank and Industrial Bank both up more than 2 percent.
China's central bank abstained from open market operations on Tuesday, a move to help liquidity as money market rates crept up on IPO demand and corporate tax payments. (Additional reporting by Saikat Chatterjee; Editing by Richard Borsuk)