HK shares hit highest close in 15 mths; China dips

* HSBC hits one-year high on strong outlook

* HK index could test 23,000 on abundant liquidity -broker

* SMIC jumps after CEO change, TSMC settlement

* China snaps 8-day rally, dragged down by banks
(Updates to close)

By Sui-Lee Wee and Claire Zhang

HONG KONG/SHANGHAI, Nov 11 (Reuters) - Hong Kong stocks rose
to their highest close in 15 months on Wednesday, with index
heavyweight HSBC leading gains after a bullish outlook from the
bank eclipsed concerns about stretched market valuations.

HSBC (0005.HK) rose as much as 6.2 percent to HK$94.2, its
highest since October 2008, before settling at HK$94, up 6
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 1.61 percent, or
359.05 points, to 22,627.21, its fourth straight session of
gains. Turnover was HK$72.3 billion, from Tuesday's HK$70.5
billion.

The China Enterprise Index .HSCE of top locally listed
mainland Chinese stocks rose 0.7 percent to 13,460.43.

"The market is still on the upturn," said Conita Hung, head
of equity research at Delta Asia Financial. "Liquidity is
abundant and market sentiment is still very strong. The index
could likely test 23,000 within the next few days."

But other brokers warned that the rally was not sustainable.

"The room for any upside is limited," said Peter Lai, a
director at DBS Vickers. "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."

SMIC (0981.HK), China's largest contract chipmaker, jumped as
much as 76.3 percent to HK$0.67, 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 the close,
it stood at HK$0.66, up 74 percent.

Bank of East Asia (0023.HK) rose 15.2 percent to HK$33.35 on
speculation that investment firm Guoco Group (0053.HK) may raise
its stake again in the bank, brokers said. Last week, Guoco
raised its stake in the lender to 8.01 percent from 7.99 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$1.12, 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.

SHANGHAI DIPS

China's key stock index edged down 0.1 percent, snapping an
eight-session rally, after weaker-than-expected data on new
lending for October offset news about a brisk economic recovery.

The Shanghai Composite Index .SSEC ended at 3,175.192
points after setting a three-month closing high on Tuesday.

Gaining Shanghai A shares outnumbered losers by 501 to 380,
however, while turnover slipped to 144 billion yuan ($21.1
billion) from Tuesday's 163 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. [ID:nPEK212006]

But Chinese banks extended only 253.0 billion yuan in new
local-currency loans in October, below expectations and falling
sharply from 516.7 billion yuan in September to their lowest
monthly level this year.

"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 in Beijing.

Bank shares were weak after the low loan data, with Merchants
Bank (600036.SS) losing 2.09 percent to 18.29 yuan.

"New lending is expected to be slower during the remaining
two months of the year, but the index may be stable as most
economic data are still positive," said Zhang Gang, strategist at
Central Securities in Shanghai.

"The banking sector's performance today was not that bad.
Underlying sentiment overall is still bullish."

Among gainers, China's Baoshan Iron and Steel (600019.SS) was
up 0.95 percent at 7.43 yuan after an industry source said it
raised prices for its key steel products for December sales
compared with November tags. [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 upon resuming trade after 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
plans 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 Jacqueline Wong)