HK shares bounce back 2.8 pct, led by financials

(Updates to midday)

HONG KONG, July 9 (Reuters) - Hong Kong shares rebounded 2.8 percent on Wednesday, recovering from the previous session's steep losses, with financials leading the way after the Federal Reserve said it may keep open a lifeline for Wall Street banks hit by the credit crisis.

Retreating oil prices sent airline shares soaring, with Cathay Pacific (0293.HK: Quote, Profile, Research) gaining 6.2 percent and Air China (0753.HK: Quote, Profile, Research) surging 7.9 percent.

Index heavyweight HSBC Holdings (0005.HK: Quote, Profile, Research) led the gains with a 2.9 percent jump, a day after it fell 2.4 percent as investors fretted about further write-downs at major banks.

On Tuesday, Fed Chairman Ben Bernanke said the U.S. central bank might extend emergency lending facilities for big Wall Street banks past year-end, calming worries in the global credit markets.

The Hang Seng Index .HSI ended the morning session up 589.13 points at 21,809.94 in an across-the-board rally.

"Falling oil prices set the mood for today's recovery and early in the session the A-shares market rallied strongly, pulling the locally listed Chinese stocks higher," said Philip Chan, head of research with CAF Securities.

Mainboard turnover rose to HK$41.48 billion ($5.32 billion) from HK$35.88 billion at midday on Tuesday.

The China Enterprises Index .HSCE of top locally listed Chinese firms jumped 4.7 percent, led by financials.