* HSI +1.6 pct, HSCE +2.8 pct
* Casino stocks up on strong growth in Macau's gaming revenue
* Chinese banks up as central bank cut cash reserve rate
Oct 3 (Reuters) - Hong Kong stocks rose on Tuesday, led by Chinese banks and insurers after China's central bank cut reserve ratios and by materials shares after Beijing reported stronger-than-expected September factory activity.
The blue chip Hang Seng index rose 1.6 percent to 28,003.80 points by the lunch break as trading resumed following a public holiday on Monday.
The Hong Kong China Enterprises Index surged 2.8 percent to 11,211.79, heading for its biggest daily percentage gain since May 25, 2016.
"Chinese banks are anticipated to benefit from the latest central bank's move," said Steven Leung, a director from UOB Kay. "The latest move is seen to give those struggling small to medium size enterprises a breather."
China's central bank on Saturday cut the amount of cash that some banks must hold as reserves for the first time since February 2016 in a bid to encourage more lending to struggling smaller firms and energize its lacklustre private sector.
Analysts at Morgan Stanley said in a note that the move, which it estimated could release around 300 billion yuan ($45 billion) in liquidity, should support banks' net interest margins and profit growth in 2018, when the cuts take effect.
ICBC rose as much as 6.2 percent to HK$6.16, the highest since July 2015. China Construction Bank climbed 5.4 percent and Bank of China gained 4.2 percent. Ping An Insurance Group rose 2.4 percent.
Chinese markets will be shut all this week for the holiday and will not resume trade until Oct. 9.
Investors are also awaiting China's 19th Communist Party Congress, which starts on Oct. 18. The twice-in-a-decade meeting will see a key leadership reshuffle and the setting of top political and economic priorities for the next five years.
Upbeat manufacturing activity data from China at the weekend also boosted confidence.
An official survey showed the sector expanded at the fastest pace since 2012 in September as factories cranked up output to take advantage of strong demand and high prices, easing worries of a slowdown.
Hong Kong-listed gaming stocks rose after Macau casino revenue rose 16.1 percent in September from a year earlier, heading into a bumper National Holiday week which is expected to see strong visitor traffic to the world's biggest casino hub. ($1 = 6.6533 Chinese yuan renminbi) (Reporting by Donny Kwok; Editing by Kim Coghill)