Hong Kong shares close at highest since May 3, China edges higher

(Updates to close)

* HSI rises 0.7 pct for day, 0.6 pct for the week * CSI300 edges up 0.1 pct, up 0.5 pct this week

* H-share index outperforms HSI for 2nd week, powered by China banks

* Sands China leads gains in Macau gaming sector By Clement Tan

HONG KONG, Oct 12 (Reuters) - Hong Kong shares closed at their highest since May 3, after a sixth-straight weekly gain aided by strength in the Chinese banking sector due to expectation of more government moves to jack up China's growth rate.

Shares of five Chinese bank stocks gained at least 1 percent in Hong Kong on Friday, significantly more than their Shanghai-listed counterparts rose.

Mainland Chinese markets edged higher, closing out a second-straight weekly gain ahead of economic data over the weekend that will provide fresh clues on the state of the slowdown in the world's second-largest economy.

While turnover improved marginally in both markets this week, interest faded near the end in Shanghai. Optimism towards China plays increased slightly, but investors are awaiting specific policy moves.

"Sentiment has changed for the better, but the market is still looking for details on the nature of Beijing's policy before committing more to the rally," said Jackson Wong, Tanrich Securities' vice-president for equity sales.

The CSI300 of the biggest Shanghai and Shenzhen listings rose 0.5 percent this week, while the Shanghai Composite Index gained 0.9 percent. Both indices edged up 0.1 percent on Friday.

The Hang Seng Index rose 0.7 percent for the day and 0.6 percent this week to 21.136.4. The China Enterprises Index

of the top Chinese listings in Hong Kong jumped 1.1 percent on Friday and 3.8 percent for the week.

Strength in Chinese financials helped the China Enterprise Index, also known as the H-share index, outperform the Hang Seng Index for a second straight week.

Over the past four weeks, inflows into offshore China equity funds have averaged more than US$200 million a week, bigger than those into other Asian markets, according to fund tracker EPFR.

Further strength in Chinese shares could depend on September China trade data on Saturday and inflation on Monday.

Data posted in the final hour of trading showed Chinese banks extended 623.2 billion yuan ($99.28 billion) of new local-currency loans in September, below market expectations of 650 billion yuan.


On Friday, China Construction Bank (CCB) rose 1.8 percent in Hong Kong, extending its weekly gain to 5.3 percent. Industrial and Commercial Bank of China (ICBC) rose 1.4 percent in Hong Kong and 0.5 percent in Shanghai.

This was CCB's best week in 11 after Central Huijin, a unit of China's sovereign wealth fund, said late on Wednesday that it had bought Shanghai-listed shares of the "big four" banks and would continue to increase its stakes.

The announcement triggered a sector rotation as investors exited the outperforming Hong Kong property sector. On Friday, Henderson Land slipped 1.4 percent, trimming its 2012 gains to 41.8 percent.

After markets closed on Friday, ICBC and Agricultural Bank of China (AgBank) confirmed Huijin increased its stakes in both banks' A-share listing.

Sands China led gains in the Macau gaming sector, surging 4.9 percent after Credit Suisse analysts said they expect the company to post the strongest quarter-on-quarter EBITDA growth of 16 percent among its sector peers.

Li Ning rose 3.4 percent after China's best-known sportswear brand said its chief financial officer has resigned, the latest departure from senior management as the company grapples with China's economic slowdown.

(Additional reporting by Vikram Subhedar; Editing by Richard Borsuk)

((clement.tan@thomsonreuters.com)(+852 2843-6392)(Reuters Messaging: clement.tan.thomsonreuters.com@reuters.net))