HONG KONG, July 14 (Reuters) - Hong Kong stocks rebounded from a seven-week low on Tuesday after strong gains on Wall Street spurred bargain-hunting in banks and financials, but traders said the rally could fizzle out as fears about the broader economy weighed.
Shares in Shanghai came close to a 13-month intraday peak struck on Friday, boosted by solid gains in overseas stocks and hopes for an improving earnings outlook.
In Hong Kong, banks and financial issues gained as investors looked for laggards, particularly after influential financial analyst Meredith Whitney's bullish outlook for bank earnings boosted U.S. stocks.
HSBC contributed the most to the rise of the benchmark index, advancing 2.9 percent to HK$63.10. Chinese lender Construction Bank gained 2 percent to HK$5.54, Bank of China rose 2.6 percent to HK$3.51, and ICBC was up 2.4 percent at HK$5.04.
Chinese insurer China Life climbed 2.5 percent to HK$30.40.
Here are the index moves and top stocks on the move by midday.
HONG KONG
* The benchmark Hang Seng Index rose 2.36 percent or 406.38 points to 17,661.01. Turnover dropped to HK$25.4 billion, from HK$27.9 billion at the midday close on Monday, indicating that some investors were cautious about the market outlook.
* "The market lacks direction and momentum," said Peter Lai, a director with DBS Vickers. "Investors are holding a wait-and-see attitude and volumes remain weak. We could experience a correction in the third quarter."
* Dealers are looking ahead to data on U.S. retail sales and corporate earnings later this week for indications of corporate health in the world's largest economy.
* The China Enterprises Index, which represents top locally listed mainland Chinese stocks, had risen 2.43 percent to 10,528.95.
* Tsingtao Brewery surged 6.3 percent to a 17-month high of HK$26.10 after the brewer said it expected first-half profit to increase 60-70 percent year on year.
* Shimao Property rose 2.1 percent after it said its 64.21 percent-owned unit Shanghai Shimao would issue up to 150 million A shares, raising about 2 billion yuan ($292.7 million) to fund development projects in Qingdao, Jiangsu, Suzhou and Beijing.
* Huadian Power International rose 5.4 percent to HK$2.55. The power company said it produced 50.07 million megawatt-hours of electricity in the first half of 2009, up 5.15 percent from a year earlier, as more power plants commenced operation.
* Orient Overseas (International) gained 2.1 percent to HK$31.45, despite the shipping company forecasting continued weak container shipping volumes and rates for the second half of the year. The company said total revenue for the second quarter fell 42.6 percent year on year to US$869.6 million, with total container shipping volumes down 18.7 percent.
SHANGHAI
* The Shanghai Composite Index rose 1.56 percent to 3,128.484 by the end of the morning session.
* Gaining Shanghai A shares outnumbered losers by 719 to 190, while turnover for Shanghai A shares rose to 87.9 billion yuan ($12.9 billion) from Monday morning's 84.7 billion yuan.
* But the rise in Shanghai shares was kept in check on worries about fallout from a coming flood of initial public offerings, analysts said.
* "The wave of IPOs suggests the government does not want to see the index rise too fast, so they could accelerate IPO approvals at any time if the market becomes overly speculative," said Huatai Securities analyst Chen Huiqin.
* Sichuan Expressway Co took institutional subscriptions on Tuesday for its IPO and will take retail subscriptions on Wednesday. China State Construction Engineering Corp has launched what is expected to be the world's largest IPO this year.
* Financial shares led gains. Ping An Insurance jumped 7.3 percent to 58.66 yuan after saying premium income in the first half rose 36 percent from a year earlier to 73 billion yuan.
* Haitong Securities, a major Chinese brokerage, rose 1.32 percent to 17.67 yuan after saying net profit for the first half rose 22 percent from a year earlier to 2.5 billion yuan, helped by the stock market's surge.
* Coal stocks were among the biggest gainers, with Shanxi Guoyang New Energy up 9.7 percent at 38.50 yuan after forecasting net profit in the first half could rise 50 to 100 percent.
* Baosteel climbed 2.6 percent to 8.17 yuan after sources said earlier this week that it would raise prices of its major steel products by 9-13 percent next month, more than expected.
* China Eastern Airlines and Shanghai Airlines jumped by their 5 percent daily limits for a second straight day after China Eastern said it would acquire its smaller rival in a share swap worth 9 billion yuan.
* Some analysts said the boost from the merger news may be short-lived because completing the merger would not be easy and the combined company was unlikely to lift earnings much this year. (Reporting by Sui-Lee Wee and Donny Kwok in HONG KONG and Claire Zhang in SHANGHAI; Editing by Chris Lewis)