UPDATE 1-China shares mixed after rate hike, property down

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SHANGHAI, Dec 21 (Reuters) - Chinese stocks were mixed on Friday after an earlier-than-expected interest rate hike was announced following the previous day's close. Banking shares stayed firm, but property stocks fell.

The Shanghai Composite Index .SSEC, which bounced in mid-week from near chart support at its late November low of 4,778.727 points, was up 0.32 percent at 5,059.429 at midday, though it came well off a high of 5,112.388 hit in early trade.

Rising stocks in Shanghai outnumbered losers slightly by 439 to 386, while turnover was a modest 52.5 billion yuan ($7.1 billion), up from Thursday morning's 43.5 billion yuan.

Although the rate hike came several weeks earlier than the market had expected, a monetary tightening of that size had already been largely priced in.

"The rate hike is not aimed at knocking down stock prices," said Ha Jiming, chief economist at China International Capital Corp, adding that it would not pull large amounts of money out of the market into bank deposits.

Although the central bank raised the benchmark one-year deposit rate by 27 basis points and the one-year lending rate by 18 bps, analysts said banks' profit margins would not necessarily suffer, since the demand deposit rate was actually cut, by 9 bps.

Shares in Industrial Bank of China (601398.SS)(1398.HK), the biggest bank, rose 0.89 percent to 7.96 yuan as some analysts interpreted the structure of the rate changes as showing authorities wanted to protect banks' profits.

The official Shanghai Securities News on Friday quoted unnamed sources as saying authorities would set a ceiling of 15 percent for next year's loan growth and enforce it strictly.

That was also good news for banks. Although such a ceiling represents a slowdown from actual loan growth during most of this year, it is above the 14 or 14.5 percent that some analysts had feared would be set as next year's ceiling.

But the stock index came well off its highs in the late morning as property shares, which have been hit this month by signs that the residential real estate market is flagging, resumed dropping. The biggest developer, Vanke (000002.SZ), slid 1.34 percent to 28.00 yuan.

Lending rates most directly related to property purchases, including loan rates above five years, were not raised on Thursday, which should limit the impact on property.

Nevertheless, analysts think there will be some impact, especially on small developers.

A survey in the Shanghai Securities News found 54.47 percent of Shanghai residents thought prospects were unfavourable for the city's home prices next year.

Elsewhere, non-ferrous metals shares surged, with Aluminium Corp of China (601600.SS)(2600.HK) up 3.45 percent to 39.01 yuan, as Shanghai copper and zinc futures surged for a second straight day.

But smaller steel shares dropped, with Angang (000898.SZ) (0347.HK) off 1.20 percent to 28.70 yuan, after industry officials said China was likely soon to announced a rise in export taxes for steel.

Tianjin Port (600717.SS), north China's busiest port, was firm at 25.15 yuan, up 0.8 percent, after saying it would raise fees for unloading containers by 10 percent next year, in line with other port operators. ($1 = 7.3687 yuan) (Reporting by Samuel Shen; Editing by Andrew Torchia)