(Updates to midday)
* HSI up 1.1 pct at 5-mth high, H-share index up 2.1 pct
* CSI300 up 2.4 pct, Shanghai Comp up 2.1 pct
* Sinopec shares near 5-month high, lead energy sector rally
* ZTE shares slump 4.9 percent, extend drop on U.S. Congress report
* China Molybdenum triples in Shanghai IPO debut, shares halted
By Vikram Subhedar
HONG KONG, Oct 9 (Reuters) - Hong Kong shares rose to a five-month high and China shares gained more than 2 percent in active trade on Tuesday, as hopes of more steps to support the market from Beijing spurred rallies in large-cap banking and energy shares.
A report in China Daily said market regulators had pledged to speed up approvals for quotas for Qualified Foreign Institutional Investors (QFIIs), the only way for offshore investors to directly access China's domestic markets.
"A lot of investors are underweight China in their portfolios so any talk on QFII is likely to encourage them to start getting involved again," said Tom Kaan, a director at Louis Capital Markets in Hong Kong.
The Hang Seng rose 1.1 percent by the midday trading break. Chinese banks and oil producers, which carry the biggest weightings in the local benchmark indexes, lifted the China Enterprises index 2.1 percent higher.
The CSI300 index of top Shanghai and Shenzhen listings rose 2.4 percent while the Shanghai Composite rose 2 percent. Volumes in Shanghai in the morning session were equivalent to recent full-day totals.
The report of more reform comes after Chinese regulators cleared the way for overseas investors to buy more than $30 billion worth of stocks and bonds in China, exceeding the previous programme limit, as Beijing seeks to attract more foreign portfolio investors.
It also comes amid speculation of more government funds being put to work to boost investor confidence.
China's largest listed broker Citic Securities rose 3.1 percent in Shanghai. Industrial Securities rose 10 percent, the biggest gainer on the CSI300, while Haitong Securities rose 3.7 percent.
In a sign of returning risk appetite, shares of China Molybdenum Co Ltd nearly tripled after listing in Shanghai before trading was suspended.
But there was no respite for ZTE Corp shares which extended losses to fall 4.9 percent after a U.S. congressional report said the company could pose a security threat dashing hopes of expansion plans.
ZTE shares are down 10.6 percent since last Friday's close.
BANKS, OIL PRODUCERS UP
ICBC shares rose 2.2 percent and were the top boost on the Hang Seng after a report that China's Central Huijin Investment, a state-owned asset management company, had bought 6.3 million shares of the bank in the third quarter.
That led to speculation that Huijin may lift its stake in other Chinese banking shares, traders said, as authorities try to restore confidence among the mainland's retail investors.
"Markets have gotten caught up in this talk of government funds buying banking shares before and I'd be careful about chasing this move," said Kaan.
Chinese financials listed in Hong Kong are flat for the year compared with a 14.2 percent rise on the Hang Seng.
Energy shares, in particular oil producers which have suffered over the past week as crude prices weakened, also recovered with Sinopec surging 4.4 percent to break above its Aug. 17 high.
China Oilfield Services, which operates rigs, rose 3.7 percent. Petrochina was up 2.9 percent. (Editing by Edwina Gibbs)