* HSI +0.9 pct, H-shares +1.1 pct, CSI300 +0.7 pct
* China banks A and H shares diverge ahead of earnings
* Sinopec, Datang Power lifted by robust Q3 earnings
* China Modern Dairy sinks after $830 million stake sale
By Clement Tan
HONG KONG, Oct 30 (Reuters) - Shanghai shares rebounded from seven-week lows early on Wednesday, with Hong Kong markets also higher, led by Chinese utilities and energy giants after solid quarterly earnings.
Earnings from mid-sized lenders lifted the Chinese banking sector in Hong Kong, where risk plays were also buoyed by hopes that the U.S Federal Reserve will leave its stimulus intact at its October policy meeting ending later in the global day.
By midday, the Hang Seng Index was up 0.9 percent at 23,043.4 points, continuing a rebound this week after closing last Friday at its lowest since Sept 6. The China Enterprises Index of the top H-shares rose 1.1 percent.
The Shanghai Composite Index, which closed on Tuesday at its lowest since Sept. 5, gained 0.8 percent. The CSI300 of the leading Shanghai and Shenzhen A-share listings rose 0.7 percent.
But gains came in relatively lackluster midday volumes in both Hong Kong and China, pulling back from Tuesday.
“There’s a bit of a rotation into the oil and power sectors today in the A-share market, I‘m seeing more ‘buy’ orders today although not in the banking sector after recent gains,” said a Shanghai-based dealer at a major Chinese brokerage.
“It’s still rather defensive in the A-share market, money rates will remain a concern because it’s the last day of the month tomorrow and demand is high,” the same dealer added.
Despite the Chinese central bank’s first cash injection in two weeks on Tuesday, the weighted average seven-day repo rate - a benchmark of short-term money rates - hit another high since the end-June cash crunch early on Wednesday.
The official China Securities Journal reported on Wednesday that while there will not be a repeat of the end-June cash crunch, money supply will likely remain “in a tight balance” in the fourth quarter.
Chinese banking A-shares were hit by some profit taking after recent gains. China Citic Bank slipped 0.3 percent, while Industrial Bank inched down 0.5 percent from Tuesday’s month-high despite positive quarterly results.
In Hong Kong, Citic Bank jumped 3.9 percent, while Industrial and Commercial Bank of China (ICBC) - the sector’s largest player - climbed 0.9 percent ahead of its quarterly earnings, among a clutch due later in the day.
Other than ICBC, earnings are also expected from Agricultural Bank of China , Bank of China , Bank of Communications and China Minsheng Bank .
China Petroleum and Chemical (Sinopec) Corp jumped 3 percent in Shanghai and 1.7 percent in Hong Kong after posting a 20 percent rise in third-quarter net profit, trumping expectations.
Datang Power jumped 6.2 percent in Shanghai and 3.2 percent in Hong Kong after reporting a 103.6 percent jump in net profit in the first nine months of the year from a year earlier.
China Modern Dairy dived 5 percent after three unidentified shareholders sold 250 million shares at a discount of as much as 6.1 percent to its Tuesday closing price, raising HK$860 million, Hong Kong media reported.