* HSI -0.7 pct, H-shares -0.2 pct, CSI300 +0.3 pct
* Chinese financials strong after positive PMI
* Hong Kong off despite China PMI number, due to Fed anxiety
* ZTE at 15-month high in Shenzhen on Q3 profit expectation
By Yimou Lee
HONG KONG, Aug 22 (Reuters) - China shares edged higher on Thursday, thanks to strength in the financial sector after better-than-expected results from a manufacturing survey showed signs of stabilisation in the world's second-largest economy.
Hong Kong markets, which have fallen the past five sessions, were down again in spite of the China news because the coming reduction of Fed's stimulus remained a major concern for investors.
The flash HSBC purchasing managers index (PMI), which covers activity in China's vast manufacturing sector, hit a four-month high in August.[ID: nL4N0GN0E0]
By midday, the CSI300 rose 0.3 percent, while the Shanghai Composite Index was up 0.1 percent at 2,074.77 points. Both reversed early losses after the positive manufacturing survey.
The Hang Seng Index was down 0.7 percent at 21,669.88 points. The China Enterprises Index of the top Chinese listings in Hong Kong fell 0.2 percent. Both have dropped more than 3.5 percent in the past five days.
The PMI reading "is positive of course, but it's too early to say it would be an uptrend for an extended period. We still have to wait and see," said Mark To Wing Fung Financial Group analyst.
"We will see some kind of rebound, but people will use the opportunity to liquidate parts of their holdings," he said.
The preliminary index rose to 50.1 from July's final reading of 47.7, which was the weakest in 11 months, though the new figure barely topped the watershed 50 line which demarcates expansion of activities from contraction.
Mid-sized Chinese banks were among the leading gainers on benchmark indexes. In Shanghai, Minsheng Bank rose 1.3 percent while Merchants Bank gained 0.6 percent. Ping An Bank rose 1.7 percent to a nearly two-month high in Shenzhen.
Cyclical counters were broadly strong. In Hong Kong, China Shenhua moved up 1.7 percent, while China Coal Energy gained 1.9 percent. Anhui Conch Cement rose 1.2 percent.
EARNINGS IN FOCUS
For many stocks, earnings remained the focus.
Telecom equipment and smartphone maker ZTE Corp said it expected a net profit for the July-September quarter, which spawned a 1 percent rise in Hong Kong and a 2.9 percent gain in Shenzhen, where the stock was at its highest since May 2012.
China's Bank of Communications Co Ltd fell 1 percent in Hong Kong after the company posted a 12 percent rise in net profit for January-June, its weakest first-half in four years, due to slowing loan growth and squeezed interest margins.
China Resources Enterprise Ltd fell 2.3 percent after it said on Wednesday it bid for Hong Kong's biggest supermarket chain, ParknShop, a move analysts said would help the beer-to-retail conglomerate expand market share.
Shares of Everbright Securities fell another 2.8 percent, taking them 18 percent lower than last Friday, the day on which the brokerage accidentally purchased more than $1 billion worth of mainland shares.