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* HSI up 0.2 pct on the day, up 0.7 pct on the week
* CSI300 up 1.5 pct on Friday, up 4.6 pct this week
* Time to rotate into laggard cyclicals - BoComm strategist
* Belle gains on reported new measures to lift consumption
* Citic Securities at record high, CSRC allows sub bonds trade
By Clement Tan
HONG KONG, Dec 28 (Reuters) - Mainland Chinese shares hit six-month closing highs on Friday, while Hong Kong crept to its highest close in almost 18 months as investors rotated into Chinese non-financial counters after Beijing raised hopes of quicker sector reforms.
Gains on Friday came in reduced turnover in both markets with benchmark indices confined to recent ranges, suggesting the rally powered by China growth-related plays this month is running out of steam as the year winds to a close.
The Hang Seng Index inched up 0.2 percent on the day and 0.7 percent on the week to 22,666.6, its highest closing level since July 8, 2011.
The China Enterprises Index of the top Chinese listings in Hong Kong rose 0.3 percent on Friday and 1.3 percent this week, underperforming onshore Chinese peers for a fourth consecutive week.
The CSI300 of the top Shanghai and Shenzhen listings jumped 4.6 percent this week, while a 3.7 percent spike nudged the Shanghai Composite Index into positive territory on the year.
On Friday, they each rose 1.5 and 1.2 percent, hitting their respective highest closing levels since June 21. Shanghai bourse volume stayed above its average in the past month, but sank some 10 percent from Thursday.
On the year, the CSI300 is up 5.7, while the Shanghai Composite Index is 1.5 percent, compared to the Hang Seng Index's 23 percent rise and the China Enterprises Index's 14.5 percent gain.
"It might be better for people to leave the good quality names with strong thematic stories for a while in January and start screening for cyclical names that have lagged the rally in December," said Hong Hao, chief equity strategist at Bank of Communications International Securities.
In a sign that may have started to happen, Citic Pacific rallied 4.3 percent in heavy volumes with the bulk of gains in afternoon trade. Shares of the beleaguered Chinese steel-to-property conglomerate in Hong Kong are still down almost 20 percent on the year.
Chinese non-banking financial counters were broadly stronger after the China Securities Regulatory Commission said it plans to allow brokerages to sell subordinated debt to institutional investors.
This follows a pledge from China's central bank to quicken the pace of reforming and opening up the financial sector in 2013, while preventing systemic risks.
Citic Securities , China's largest listed brokerage, surged 10.7 percent to a record high in Hong Kong since its October 2011 debut, while jumping 7.9 percent in Shanghai.
Friday's gains added to Citic Securities' stellar 2012 gains, now up 50.1 percent in Hong Kong and 35.5 percent in Shanghai.
Further boosting sentiment, the official Shanghai Securities News reported on Friday that the securities regulator is working on details on lowering requirements for companies to list in Hong Kong and allowing them to issue corporate bonds to ease pressure on the onshore Chinese market.
Shares of Belle International, a leading China-focused footwear retailer, gained 3.1 percent after the state-run China Securities Journal newspaper reported that Beijing could introduce new measures to boost consumption ahead of the annual party congress in March.
Gains on Friday helped Belle end at HK$16.88, its highest close since August 2011 and not far from its record high of HK$17.54, which was set in July 2011.
Belle is now up 24.7 percent for the year, but is still trading at an 8 percent discount to its historical 12-month forward earnings multiple, according to Thomson Reuters StarMine.
Chinese automakers were also stronger after the sector was cited in the same China Securities Journal report as a possible policy reform beneficiary.
SAIC Motor rose 3.6 percent in Shanghai. Warren Buffett-backed BYD Co Ltd jumped 4.1 percent in Hong Kong and 1.9 percent in Shenzhen.