Hong Kong shares gain 1.3 pct, telcos gain on 3G

* Chinese telcos rally on 3G licence hopes

* Lenovo climbs after restructuring report

* PCCW slips on Citigroup downgrade (Updates to midday)

By Parvathy Ullatil

HONG KONG, Jan 5 (Reuters) - Hong Kong shares rose 1.3 percent on Monday, with China Mobile (0941.HK) rising for a second day on hopes that Chinese telecom operators will soon be issued licences to offer third generation (3G) services.

China's Lenovo Group (0992.HK) climbed 4.1 percent after the Chinese magazine Caijing said the world's No.4 personal computer maker was set to announce a major restructuring plan on Jan. 8 including changes of its top management.

The Hang Seng Index .HSI ended the morning session 1.3 percent higher at 15,230.87 with a 1.3 percent drop in HSBC Holdings (0005.HK) limiting gains.

"HSBC still faces a lot, many challenges in its U.S. and UK markets and the stock rebounded quite a lot on Friday," said Castor Pang, strategist with Sun Hung Kai Financial.

"The U.S. markets are leading Asian markets to a short-term recovery but it's not time to get bullish yet. This rebound is only a short-term phenomenon," he said.