HK shares gain 3.2 pct, led by banks and resources
* HK shares pare gains amid flat China market
* Commodity stocks surge as oil, gold rally for second day
* ICBC up after Goldman Sachs adds it to conviction buy list
* Hutch Telecom drops as investors exit after dividend payout
(Updates to midday)
By Parvathy Ullatil
HONG KONG (Reuters) - Hong Kong shares rose 3.2 percent on Tuesday after Wall Street gave a resounding thumbs up to the government's decision to rescue Citigroup, while resurgent oil prices helped energy stocks to notch up big gains.
China's top lender, ICBC (1398.HK), surged 6.6 percent after Goldman Sachs added it to its conviction buy list, citing its lower risk profile and less net interest margin pressure than its peers.
The benchmark Hang Seng Index .HSI ended the morning session 403.71 points higher at 12,861.65, led by a 2.1 percent gain in global lender HSBC Holdings (0005.HK).
Other regional markets also rose, but a flat performance on mainland bourses limited gains in the local market.
"We were waiting for an indication from Wall Street on how the Citi bailout should be received, as the local interpretation of the rescue is quite different from what U.S. investors think," said Y.K. Chan, strategist with Phillip Capital Management.
Hong Kong shares fell on Monday as the anticipated Citigroup bailout plan failed to ignite buying, but U.S. stocks surged as the plan eased investor concerns over the financial sector.
Chan added, however, that overall weakness in the economy had limited gains and the market could still fall below its October low in the absence of new stimulus steps from the U.S. and China.
CNOOC (0883.HK) surged 8.5 percent after oil prices leapt 9 percent overnight and stayed close to $54 per barrel in Asian trade on Tuesday, buoyed by expectations of an output cut by producer cartel OPEC.
Asia's largest oil and gas producer, PetroChina (0857.HK), gained 4.9 percent, while top coal miner China Shenhua Energy (1088.HK) added 5.7 percent.
The China Enterprises Index of top locally listed mainland Chinese firms .HSCE rose 4.3 percent to 6,651.52. Continued...
