* HSI flat, CSI300 slips 0.6 pct
* Chinese banks weak, reportedly required to support infrastructure projects
* China Telecom, Unicom rise after iPhone 5 announcement
By Clement Tan
HONG KONG, Sept 13 (Reuters) - Hong Kong shares were little changed on Thursday, while mainland Chinese markets slipped in tepid turnover with the China banking sector weaker after state media reported that Beijing has instructed banks to step up lending for infrastructure projects.
Trading this week has been subdued as investors locked in profits ahead of the end of a two-day U.S. Federal Reserve meeting later on Thursday at which policymakers could announce more stimulus measures.
But markets have have largely held onto gains posted last week after China announced a raft of infrastructure project approvals, compared to the downward spiral which followed Beijing’s last two interest rate cuts - suggesting investors are taking the latest developments as a stronger signal of Beijing’s intent to shore up flagging growth.
The Hang Seng Index closed up 0.04 percent at midday and is now up 1.4 percent on the week. The China Enterprises Index of the top Chinese listings inched up 0.1 percent as midday bourse turnover sank to the lowest in five sessions.
In the mainland, the CSI300 Index of the top Shanghai and Shenzhen listings shed 0.6 percent, while the Shanghai Composite Index slipped 0.5 percent. They are down 0.4 and 0.5 percent on the week so far.
“Friday’s move up might be a bit violent, but you got to take it in the context of how beaten down the markets have been in the mainland this year,” said a Shanghai-based manager of a Qualified Foreign Institutional Investor (QFII) fund.
“Last week’s media reports were an important easing signal from Beijing that they are still looking to stimulate the economy,” the same fund manager added, declining to be identified because he is not authorised to speak to the media.
Since last Thursday, he has upped his allocation to equities from 40 perccent of his portfolio to the maximum 70 percent while reducing allocations to cash and fixed income.
But he said he remained underweight on the Chinese banking sector, which fell on Thursday after the state-run China Securities Journal reported that Beijing has told banks to give credit support to construction projects involving railways, roads and social housing.
Bank of China was down 0.4 percent in Hong Kong and 1.1 percent in Shanghai. Agricultural Bank of China (AgBank) slipped 0.7 percent in Hong Kong and 0.4 percent in Shanghai.
Infrastructure-related plays were again strong. China Railway Group rose 2.1 percent in Hong Kong and 1.2 percent in Shanghai.
Also bucking broader market weakness were plays relating to Apple Inc’s announcement on Thursday that its new iPhone will go on sale from this Friday with a bigger screen and 4G wireless technology.
China Unicom and China Telecom, mainland telcos which carry the iPhone on their networks, rose 1.7 and 0.7 percent, respectively, in Hong Kong. China Mobile, the largest sector player but does not offer the iPhone, slipped 1.2 percent.