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China, HK shares jump on reform plans; commodities sector strong

* HSI +1.7 pct, H-shares +1.7 pct, CSI300 +2.1 pct

China's nickel firms jump after futures index surges

* Speculation of stamp duty changes spur HK developers

* Tencent up 4.7 pct, set for best day in a month

By Grace Li

HONG KONG, May 12 (Reuters) - China's pledge to push ahead with a broad range of capital market reforms and a surging commodities sector sent the CSI300 index to its highest in more than a month by midday on Monday.

China's State Council said late last week it would develop a system for direct bond issuance by local governments, streamline the approval process for initial public offerings (IPOs), and remove some restrictions on the use of financial derivatives.

New rules were also issued separately by the Securities Association of China governing IPOs.

Further steps in China's market liberalisation boosted sentiment although not all were convinced the rally could be sustained.

"The new policy announcement may have strengthened investor confidence, and Shanghai's main board tends to benefit more from it," said Cao Xuefeng, head of research at Huaxi Securities in Chengdu.

The CSI300 of the leading Shanghai and Shenzhen A-share listings jumped 2.1 percent by midday, heading for its best day since April 8. The Shanghai Composite Index was up 1.9 percent at 2,049.43 points, its best level since April 25.

Several analysts said the reform measures would likely not trigger sharper rises as these were long-term plans and would take time to implement.

"Beijing's capital market reform is quite a long term policy but investors took it as an excuse to cover their short position in particularly ahead of some Q1 earnings like Tencent," said Steven Leung, a director at UOB Kay Hian.

Du Changchun, an analyst at Northeastern Securities in Shanghai, agreed adding that he expected the index to hover between 2,000 to 2,100 points in the near term.

By midday, the Hang Seng Index rose 1.7 percent to its highest since May 5, while the China Enterprises Index of the top Chinese listings in Hong Kong gained 1.7 percent. If gains persist, this would be their best since March 24.

In China, a total of 13 coal shares jumped to their 10 percent daily limit, including Beijing Haohua Energy Resource Co , Yang Quan Coal Industry (Group) Co and Shanxi Coal Industry Company Limited.

Nickel companies also rose sharply after the nickel futures index jumped to its highest since Feb 2012 on supply concerns. Investors and consumers are buying the metal on prospects of a worsening supply shortfall later in the year.

Jilin Ji En Nickel Industry Co and Chengdu Unionfriend Network Co leapt by their 10 percent daily limit.

In Hong Kong, analysts said investors remained cautious about the Chinese economy despite a firmer tone in the mainland and said the gains may be short-lived.

"(Hong Kong) investors are now lacking direction. They are just taking cues from the A-share market," said Ben Kwong, head of research at KGI Asia. "If you jump into the market now, it's very unlikely to see a sustainable upward trend. It's still an up-and-down market."

Leading the gains in Hong Kong were technology, financial firms and property. Tencent Holdings Ltd jumped 4.7 percent, set for its best day in a month, while Citic Securities rose 5.5 percent to a two-week high.

Shares of property developers surged amid speculation the government may change the city's stamp duty rules, with the real estate sub-sector index jumping more than 3.5 percent.

(Additional reporting by Yimou Lee in Hong Kong and Chen Yixin in Shanghai; Editing by Jacqueline Wong)