HK shares close up 3 percent after Obama win

* HK shares pare gains after election result

* PCCW surges on $2 billion buyout offer

* Chinese banks extend gains on hopes of more monetary easing

(Updates to close)

By Jun Ebias

HONG KONG, Nov 5 (Reuters) - Hong Kong shares pared early sharp gains to close 3.2 percent higher on Wednesday after the initial euphoria over a Barack Obama win gave way to concerns over a looming recession in the world’s largest economy.

“I reckon investors will focus again on the economy. The U.S. recession will not disappear overnight,” said Louis Wong, research director at Phillip Securities.

Chinese financial stocks, including Construction Bank 0939.HK, gained for a third straight day, while energy stocks such as PetroChina 0857.HK climbed after oil prices rose.

Stock markets around Asia cheered Wall Street's biggest ever Election Day gain, with Tokyo's Nikkei average .N225 up 4.5 percent and Shanghai's main index .SSEC up 3.2 percent.

“The U.S. election is offering a kind of change that investors have been waiting for. It’s a stimulus to investor confidence,” said Winson Fong, managing director at SG Asset Management in Hong Kong.

“Hedge funds are awash with cash, so it is time to invest and make money. It is dangerous to ignore these stocks at these levels. They are too cheap.”

Shares in PCCW 0008.HK soared 27 percent in their biggest one-day percentage gain in nine years as speculators chased up the stock. The shares resumed trading after tycoon Richard Li led a $2 billion buyout offer by major shareholders in the city's dominant fixed-line operator.

But market watchers expect minority investors will shoot down the HK$4.20 per share offer as it is below market expectations.

The benchmark Hang Seng Index .HSI closed the session up 455.82 points at 14,840.16. The index rose as much as 6.5 percent earlier.

“The Obama win is at best a short-term stimulus for the market. It won’t do anything to change the fundamentals of the economy in the near term,” said Sean Tsang, senior vice president with Polaris Securities in Hong Kong.

“There are some major policy expectations from the new administration but those will take effect in the mid to long term.”

Dismal economic data from Europe and the U.S. has prompted some analysts into thinking the global recession has already begun. Investors will watch U.S. payroll and jobless data due on Friday for further indications on the state of the economy.

Shares rallied across the board, with advancing stocks outpacing decliners 647 to 191.

Mainboard turnover rose to HK$63.4 billion ($8.1 billion) from HK$45.3 billion on Tuesday.

The China Enterprises Index .HSCE of top locally listed mainland Chinese companies surged 5.3 percent to 7,225.69.

Chinese financials notched up strong gains, drawing strength from the jump on the Shanghai Composite Index .SSEC.

Top lender Industrial & Commercial Bank of China 1398.HK gained 3.7 percent, extending its rally into a third straight session on hopes of easier lending on the mainland. No.3 lender China Construction Bank 0939.HK rose 5.5 percent.

BNP Paribas upgraded the sector to neutral from underweight on attractive valuations.

China Life 2628.HK gained 3.4 percent, while smaller rival Ping An Insurance 2318.HK put on 7.8 percent.

Local lender BOC Hong Kong 2388.HK surged 17.2 percent to HK$9.70 after giving up more than 10 percent in the previous five sessions.

A 10 percent jump in oil prices overnight sent energy stocks soaring. Asia's largest oil and gas producer, PetroChina 0857.HK, advanced 4.3 percent, while Sinopec Corp 0386.HK, Asia's largest refiner and China's second-biggest oil producer, moved up 5.3 percent. CNOOC 0883.HK, the smallest player in China's energy producing triumvirate, rose 5.8 percent.

China Shenhua Energy 1088.HK, the world's most valuable coal miner, gained 3.5 percent.

Mainland property counters built on earlier gains on hopes that easing lending curbs would help demand for real estate. China Overseas Land Investment 0688.HK climbed 9.5 percent while China Resources Land 1109.HK added 8 percent.

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