China shares' rebound turns tepid, Hong Kong strong again
* HSI +1.3 pct, H-shares +0.7 pct, CSI300 +0.2 pct
* China credit crunch fears ease, economy still a worry
* Shanghai Comp Index set for best day in nearly 3 weeks
* Hong Kong shares at one-week high, financials rebound
* Fund managers hunt for bargains ahead of half-year
HONG KONG, June 27 (Reuters) - China shares rose cautiously on Thursday, led by a modest rebound in financials, as fears of a credit crunch eased, boosting markets across Asia.
Hong Kong markets climbed to their highest in a week as better-than-expected China industrial profits data also helped buoy sentiment.
By midday, the CSI300 rose 0.2 percent, while the Shanghai Composite Index was up 0.4 percent at 1,959.24 points, but both quickly pulled back from early highs.
The Hang Seng Index rose 1.3 percent to 20,607.27 points. The China Enterprises Index of the top Chinese listings in Hong Kong gained 0.7 percent.
"It's just bargain-hunting. There are still lots of uncertainties ahead," said Ben Kwong, KSI Asia Ltd's chief operating officer in Hong Kong, adding that he expected the Hang Seng to seesaw between 20,000 and 21,000 points in coming weeks.
"The market will still have quite of lot of volatility in the third quarter," he said.
China cash rates eased for a fifth day on Thursday as the panic of a possible credit crunch that gripped the market last week subsided, but traders said money market rates remain elevated and liquidity is tighter than normal, ID:nL3N0F221I 3/8
Chinese markets regained some stability after the central bank earlier this week moved to quell concerns by saying it had provided funds to some institutions and will do so again if there is a need.
Yet, it remained commited to cracking down on risky informal lending, pointing to tougher conditions for the banking sector ahead and possibly slower economic growth.
In Hong Kong, Industrial and Commercial Bank of China (ICBC) gained 2.6 percent and China Construction Bank (CCB) 0.4 percent, while in Shanghai ICBC rose 1.1 percent and CCB 1.3 percent.
The president of CCB, the country's No.2 lender, said on Thursday it has not stopped issuing new loans amid a tightening of credit in the country that has sparked reports some banks may be reining in lending.
Helping to improve sentiment, data showed China's May industrial profits rose 15.5 percent from the same month last year, while profits for the first five months of 2013 rose 12.3 percent from last year.
China regulators also have quickened approvals for quota applications under the renminbi qualified foreign institutional investor (RQFII) scheme, allowing more foreign investors to use offshore yuan to buy mainland securities, according to media reports.
Brokerages Haitong Securities and Soochow Securities rose 0.5 percent and 0.9 percent, respectively.
Traders said "window-dressing" buying from fund managers ahead of the half-year also gave markets a boost, with retailers particularly strong after the recent sell-off.
Shares of jewellery retailer Chow Tai Fook Jewellery Group Ltd surged 5.6 percent on Thursday, after the stock plunged to a record low on Tuesday.
Smaller rival Luk Fook Holdings (International) Ltd rose 6.5 percent after falling to its lowest since July last year.
Shares of China's largest footwear retailer Belle International Holdings Ltd rebounded 5 percent, after hitting its lowest since June 2010 earlier this week.
In China, Anhui Conch jumped 4 percent after plunging 19 percent since mid-June, while China State Construction rose 4.2 percent after a 12.7 percent decline in the past six sessions.