China shares steady on c.bank assurances, Hong Kong rebounds firmly
* HSI +2.4 pct, H-shares +3.3 pct, CSI300 +0.1 pct
* China shares mixed as markets were calmed by PBOC comments
* Hong Kong shares have best day since Jan. 2 as investors seek bargains
* China banks remain weak onshore due to lingering cash crunch fears
HONG KONG, June 26 (Reuters) - China shares ended flat in choppy trade on Wednesday, trimming early losses as Chinese financial markets were calmed by the central bank's pledge to prevent any lasting credit crunch, while Hong Kong stocks turned buoyant in the afternoon.
Hong Kong indexes had their best day in nearly six months as investors hunted for bargains after recent market turmoil, with China banking sectors rebounding from big hits by a cash crunch in the mainland.
The CSI300 index of the leading Shanghai and Shenzhen listings shed early losses and edged up 0.1 percent in its first gain in six sessions, while the Shanghai Composite Index fell 0.4 percent at 1,951.49 points.
Both indexes have tumbled more than 9 percent since last Wednesday when the mainland's cash squeeze started to worsen, and down more than 20 percent from highs in February.
The Hang Seng Index closed up 2.4 percent at 20,338.55, while the China Enterprises Index of the top Chinese listings in Hong Kong rose 3.3 percent. Both had their biggest daily percentage gains since Jan. 2.
The mainland and Hong Kong markets "appeared bottoming out," said Andrew To, director of research of Emperor Capital Group in Hong Kong.
"As investors were covering their short positions ahead of month-end and half-year end, the markets were poised for a rebound," he said. "No matter if the markets' fundamentals are good or bad, there is a time for profit-taking and time for short-covering."
Shares in the "Big Four" Chinese banks reversed recent losses and gained in both onshore and offshore markets, as the country's short-term borrowing rates eased for a fourth day and the People's Bank of China (PBOC) moved late on Tuesday to allay fears of a banking crisis. Worries had driven Shanghai shares to their lowest in nearly 4-1/2 years.
With a lift from short-covering in Hong Kong, Industrial and Commercial Bank of China (ICBC) jumped 6.8 percent and China Construction Bank (CCB) 6.5 percent, while in Shanghai shares of ICBC edged up 0.5 percent and CCB gained 0.5 percent.
STILL SOME FEARS
But fears of a credit crunch and slower loan growth continued to fuel selling in the mainland of smaller Chinese banks, which are more reliant on short-term interbank funding.
Alex Wong, a director at Ample Finance Group in Hong Kong, said the PBOC's comments "did not help much to improve people's confidence as the consequences (of tight money) are yet to be seen amid slow (China) economy growth."
In Shanghai, China Minsheng Banking Corp fell 1.7 percent in spite of its statement on Tuesday that a Shanghai interbank offered rate (Shibor) hike had not caused liquidity disruption and that the management was confident about controlling credit risks despite the slowing economy.
Growth-sensitive sectors in China, from energy to materials, remained weak. Petro China fell 1.1 percent, while Zijin Mining dropped 2.9 percent.
In Hong Kong, traders said China banking and property stocks were among targets as investors went bargain-hunting. Poly Property rose 4.1 percent, while China Overseas Land gained 2.8 percent.
Kunlun Energy jumped 3.8 percent after Jefferies Equity Research upgraded it to buy from underperform, citing a shift in subsidy policy which will be positive to its vehicle business.