(Updates to midday)
* HSI up 0.5 percent at midday, Shanghai Comp little changed
* Turnover light as G7 emergency talks prompt some
* HK property offers good risk-reward: Bofa Merrill Lynch
By Vikram Subhedar
HONG KONG, June 5 (Reuters) - Battered Hong Kong shares rose
slightly on Tuesday, partly on short-covering ahead of emergency
G7 talks on the euro zone debt crisis, although investors
remained reluctant to take on fresh positions because of the
increasingly gloomy global outlook.
The Hang Seng index was up 0.8 percent at 18,337.5
after ending the midday trading break up 0.5 percent with beaten
down financials supporting gains although turnover remained
light. The China Enterprises index rose 0.7 percent.
Mainland markets, which have outperformed Hong Kong and
other regional stock indices since last month's weakness, were
little changed. The Shanghai Composite was up 0.3
percent while the large-cap focused CSI300 rose 0.2
"The brighter start to the day despite the effectively flat
close overnight in U.S. markets was largely down to G7 but
unless there's some sort of firm commitment this has to be seen
as a short-term bounce," said a Hong Kong-based trader at an
HSBC Holdings was the top boost for the benchmark
up 0.8 percent and recovering from a 4-1/2 month low it hit in
the previous session.
China's biggest banks were also stronger with Bank of China
the top performer among benchmark constituents with a
1.7 percent rise on the day.
Bank of China shares have outperformed peers and still up
4.8 percent on the year compared with the 0.4 percent drop for
The Hong Kong property was broadly stronger after Bank of
American Merrill Lynch said in a note to clients rewards
outweigh the risks of buying into the sector at current levels.
The brokerage now projects Hong Kong residential prices to
rise 5 to 10 percent in 2012 versus a prior forecast that called
for a 10 percent decline largely due to the resilient
performance of homes prices in the year-to-date.
Analysts at BofA Merrill Lynch said the valuation gap
between physical property prices and stocks was at an all-time
high and the markets were pricing in a 30 percent drop in
Cheung Kong Holdings and Henderson Land
were among its top picks. The stocks were up a percent and 1.3
percent respectively on the day.
Shares of Wharf Holdings, which owns commercial
properties throughout Hong Kong, jumped 2.7 percent after the
company agreed with the Hong Kong government on terms to renew a
Bucking the trend, cyclical stocks such as coal producers
and shipping stocks remained weak as the outlook on global
growth remains grim.
China Shenhua was a percent lower while China Coal
both dropped 0.6 percent.
(Reporting by Vikram Subhedar; Editing by Ramya Venugopal)