* China bank stocks jump on report of strong new lending
* HK shares boosted by index futures-related buying
* More upside seen in mainland markets amid strong liquidity
(Updates to close)
By Parvathy Ullatil and Claire Zhang
HONG KONG/SHANGHAI, June 26 (Reuters) - Hong Kong stocks rose 1.8 percent in a third straight winning session on Friday, as investors continued to pile into property and bank stocks on signs the U.S. and China will keep to their easy monetary policies for some time.
Some of the buying was also triggered by short covering ahead of the expiration of index futures on Monday, brokers said.
China-listed stocks edged up 0.11 percent to a one-year closing high in mixed trading on Friday, as both liquidity and signs of economic recovery were positive but investors were more wary after steep gains.
"After cautious comments from the World Bank and other agencies this week, investors may have even less confidence in a recovery in developed economies. China and Hong Kong are still the places to invest in," said Philip Chan, head of research with CAF Securities.
Chinese bank stocks built on previous gains after the official China Securities Journal reported that new lending could reach 1.2 trillion yuan ($175.6 billion) in June, pushing the first-half total past 7 trillion yuan.
Top lender ICBC rose 2 percent to 5.55 yuan in Shanghai, while Bank of Communications advanced 3.8 percent to HK$8.42 in Hong Kong.
Late on Thursday, the central bank said it would stick to an appropriately easy monetary policy to support an economy that was heading in the right direction but was not yet on a solid footing.
COAL, SMALL BANKS GAIN IN HONG KONG
The benchmark Hang Seng Index was up 325.23 points at 18,600.26, gaining 3.8 percent on the week
The gauge, which has risen more than 29 percent since the beginning of the year, is trading at 16.7 times the estimated earnings of its blue-chip constituents in 2009.
"It's still true that the pick-up in economic activity is lagging the rally in the stock market, so instead of the W-shaped recovery that many expect to see, we might see an L-shape. The market may flatten out after a big correction in the second half," said Peter Lai, director with DBS Vickers.
The Greater China region recorded its first weekly net fund outflow since early March in the week to June 24, according to data from Emerging Portfolio Fund Research (EPFR).
Turnover dropped to HK$62.5 billion from Thursday's HK$60.2 billion.
The China Enterprises Index, which represents top locally listed mainland Chinese stocks, rose 2.5 percent to 11,037.14.
China Shenhua, the world's largest coal miner surged 6.5 percent to an 11-month closing high of HK$27.95 after Goldman Sachs raised its rating on the stock to buy from neutral as demand for the commodity showed signs of picking up, while supply from small mines remained tight. The brokerage set a target price of HK$35 on the stock.
Smaller rival Yanzhou Coal advanced 4.5 percent to HK$10.64. Goldman Sachs upgraded the stock to buy from neutral with a target price of HK$13.20.
Asia-focused Standard Chartered dropped 1.7 percent after it said on Thursday that it remained cautious on its outlook, with consumer banking income for the first half expected to be lower than the previous six months and bad debts rising sharply in the division.
Another UK-based bank with a strong presence in Asia, HSBC, fell 0.5 percent to HK$65.50.
Wing Hang Bank soared for a second day by 10.5 percent to finish at a nearly 10-month closing high of HK$74, even after China's top lender ICBC quashed speculation of a possible stake buy in the Hong Kong-based small lender. The stock had risen 9 percent in the previous session.
Other small-cap local banks also advanced, with Dahsing Banking Group gaining 5 percent, and Chong Hing Bank climbing 6.5 percent.
MORE GAINS SEEN IN SHANGHAI
The Shanghai Composite Index ended up 3.165 points at 2,928.211 points, posting a 1.7 percent gain this week.
Gaining Shanghai A shares outnumbered losers by 483 to 384, while turnover in Shanghai A shares slipped to 115.0 billion yuan ($16.8 billion) from Thursday's 129.0 billion yuan.
"The index has a chance to rise at the end of June on possible buying of large cap stocks by institutions," said Huatai Securities analyst Li Wenhui.
Two steel mills on Friday denied firm plans to develop an iron ore deposit that officials in Northeast China claimed was the biggest in Asia. They had halted trading on Thursday. Bengang Steel Plates jumped its 10 percent daily limit to 8.17 yuan in its heaviest trading since it first listed, despite forecasting it would post a loss as weak steel product prices caused first-half returns to fall by 140-190 percent.
Angang Steel lost 3.46 percent to 13.69 yuan after saying it expected a first-half loss of up to 3 billion yuan on weak steel prices.
Drugmakers outperformed, with Jiangzhong Pharmaceutical climbing 7.23 percent to 15.73 yuan.
Traditional Chinese medicine maker Guilin Sanjin Pharmaceutical, the first to launch an initial public offering after a nearly 10-month IPO suspension, set its price at 19.80 yuan per share or about 33 times PE ratio, a very high level, analysts said.
Other traditional Chinese medicine makers currently trade at an average of 24 times PE ratio.
Slow turnover on Friday could be partly due to investor anticipation of the new share issue, which was expected to enjoy a strong speculative debut, analysts said.
With both liquidity and signs of economic recovery positive, the index may rise next week after consolidating just below the 3,000-point mark, analysts said.
A senior government economist said in remarks published on Friday that China's gross domestic product would grow more than 8 percent in the third quarter from a year earlier and over 9 percent in the fourth quarter. (Editing by Lucy Hornby and Chris Lewis)