HK shares rise 0.7 pct, led by HSBC; China dips

* HSBC hits one-year high on strong outlook

* SMIC jumps after CEO change, TSMC settlement

* China slips, dragged down by banks on soft loan growth
(Updates to midday)

By Sui-Lee Wee and Claire Zhang

HONG KONG/SHANGHAI, Nov 11 (Reuters) - Hong Kong stocks were
up 0.69 percent at the midday break on Wednesday, with index
heavyweight HSBC leading gains after a bullish outlook from the
bank eclipsed concerns about stretched market valuations
following a three-day rally.

HSBC (0005.HK) rose as much as 4.7 percent to HK$92.85, its
highest in more than a year, before settling at HK$92.35, up
4.11 percent after the bank declared on Tuesday the first
improvement for three years in losses on U.S. consumer credit.
[ID:nLA635993]

The benchmark Hang Seng Index .HSI rose 153.04 points to
22,421.20 at midday, heading for a fourth straight session of
gains. Turnover was slightly weaker at HK$38.8 billion ($5
billion), from midday Tuesday's HK$39.8 billion.

The China Enterprise Index .HSCE of top locally listed
mainland Chinese stocks fell 0.21 percent to 13,339.24.

"Smart investors are taking profit," said Peter Lai, a
director at DBS Vickers. "The room for any upside is limited.
It's the right time to quit when the index reaches 23,000."

"Any more negative U.S. economic indicators could trigger a
correction in the market," he said.

SMIC (0981.HK), China's largest contract chipmaker, jumped
as much as 68.4 percent to HK$0.64, its highest since May 2008,
after the company announced a change of chief executive and the
settlement of a lawsuit with rival TSMC (2330.TW). At midday it
stood at HK$0.58, up 52.63 percent.

Retail chain operator Artini China Co (0789.HK) rose as much
as 46.5 percent to a near five-month high of HK$1.26, before
settling at HK$1.16, after it said its jewellery-making
subsidiary had been granted a licence by the Asian arm of the
Walt Disney Company to use materials and trademarks of Disney
characters.

China Energine International (1185.HK), which makes and
sells wind turbines, soared 19.1 percent to HK$1.12, its highest
in more than two years, after saying it would raise HK$266
million ($34.3 million) for working capital and to develop wind
energy projects in Inner Mongolia. At midday, the stock stood at
HK$1.05, up 11.7 percent.

SHANGHAI SLIPS; BANKS FALL

China's key stock index slipped 0.64 percent, with bank
shares soft after data showed that new lending slowed in
October, fuelling worries over market liquidity despite other
data pointing to brisk economic recovery.

The Shanghai Composite Index .SSEC ended the morning at
3,158.192 points, after rising on Tuesday for an eighth session
in a row to a three-month closing high.

Losing Shanghai A shares outnumbered gainers by 579 to 285,
while turnover dipped to 75 billion yuan ($11 billion) from
Tuesday morning's 85 billion yuan.

Wednesday's busy schedule of economic data releases showed
that China's export decline slowed in October, power generation
growth hit its fastest in 19 months, and industrial output
growth jumped to a 19-month high for the year to October,
underlining the economy's brisk recovery.

But Chinese banks extended only 253.0 billion yuan in new
local-currency loans in October, lower than expected and down
sharply from 516.7 billion yuan in September.

"The strong economic data for October is generally in line
with investor expectations, but shrinking new lending raised
worries about market liquidity," said Chen Shaodan, senior
analyst at Stockfly Securities.

She added that the market may be hit by profit-taking after
its extended rise, with the round figure at 3,000 points likely
to provide a floor.

Bank shares were weak after the low loan data, with
Merchants Bank (600036.SS) losing 2.14 percent to 18.28 yuan.

China's Baoshan Iron and Steel (600019.SS) was up 0.41
percent at 7.39 yuan after an industry source said on Wednesday
that it raised prices for its key steel products for December
sales by scrapping discounts implemented in November.
[ID:nSHA333474]

Chongqing Changan Automobile 000625.SZ, one of the most
actively traded shares in Shenzhen, jumped by its 10 percent
daily limit to 15.42 yuan on resuming trade following news that
its parent company had agreed to acquire major auto-related
assets from Aviation Industry Corp of China. [ID:nSHA283110]

The shares had been suspended from trade since Nov. 5,
pending a major announcement. The index was little changed
during that period.

The listed company said, however, that it had no immediate
plan to acquire the assets from its parent.

Yabao Pharmaceutical Group (600351.SS) raced up its 10
percent daily limit to 18.90 yuan after it said it was preparing
to manufacture a product that a government research body said
was effective against H1N1 flu.
(Editing by Chris Lewis)