* HSI +1.0 pct, H-shares +0.1 pct, CSI300 +0.9 pct
* Investors shrug off lacklustre Chinese factory report
* Tencent jumps on bargain hunting after recent slide
By Natalie Thomas and Chen Yixin
SHANGHAI, April 1 (Reuters) - Hong Kong shares jumped to their highest level in more than three weeks on Tuesday as casino operators continued their roll and investors snapped up beaten down shares of index heavyweight Tencent.
Mainland markets also gained, with investors unfazed by a private survey showing that Chinese factory activity fell to an eight-month low in March.
At midday, the Hang Seng Index was up 1 percent at 22,360.58 points after touching 22,390.68, its highest intraday level since March 7. The China Enterprises Index of the top Chinese listings in Hong Kong gained 0.1 percent.
The CSI300 index of the largest Shanghai and Shenzhen A-share listings was up 0.9 percent, while the Shanghai Composite Index was up 0.7 percent at 2,046.62 points.
Gambling stocks extended the previous day’s robust gains, fuelled by funds buying into the sector at the start of the quarter and on anticipation of positive Macau monthly gambling revenue data to be released in the afternoon.
Sands China Ltd soared 6.3 percent and MGM China Holdings Ltd leapt 6.6 percent.
“Quite a lot of funds are pulling back into second- or third- tier stocks, including gaming stocks, so in the short term we continue to see a rebound,” said Castor Pang, head of research at Core Pacific-Yamaichi in Hong Kong.
Shares of Tencent Holdings Ltd, China’s biggest Internet company, gained 3.7 percent, clawing back some of the 7.8 percent they lost last week when investors sold off tech shares.
On Tuesday, the final Markit/HSBC Purchasing Managers’ Index (PMI) showed a drop to 48.0 in March from February’s final reading of 48.5. The outcome was in line with last week’s preliminary PMI reading of 48.1.
“This is within market expectations,” said Cao Xuefeng, head of research at Huaxi Securities in Chengdu. “If the government has no measures to support the economy, then economic weakness may become a hidden trouble for the index in the future.”
China shares also found support from liquor companies on expectations of a rebound in the sector.
Kweichow Moutai Co Ltd rose 4.4 percent and Jiangsu Yanghe Brewery Joint-Stock Co Ltd climbed 4.9 percent.
Back in Hong Kong, Evergrande Real Estate Group rose 6.3 percent after the Guangzhou-based property developer announced a 49 percent rise in net profit for 2013.
But China Merchants Holdings (International) Co Ltd fell 5.4 percent after the company announced plans to sell HK$15.4 billion ($1.99 billion) worth of convertible securities to repay debt and fund the construction of ports and related business. ($1 = 7.7571 Hong Kong dollars) (Reporting By Natalie Thomas; Editing by Chris Gallagher)