* Financials, properties lead gains in Hong Kong
* Stocks in China lag on government investigation news
* Sinopec underperforms after parent's deal to buy Addax (Updates to close)
By Parvathy Ullatil & Claire Zhang
HONG KONG/SHANGHAI, June 25 (Reuters) - Hong Kong shares rose 2.1 percent on Thursday as investors continued to cover short positions on financial counters, while property stocks surged after the U.S. Federal Reserve stuck to its script of keeping borrowing costs low.
Top developer Sun Hung Kai Properties rose 5 percent to HK$96.75. Sun Hung Kai raised prices for flats at its project in the new territories by 8 percent amid a strong market response, the Oriental Daily reported, citing the company's executive director, Victor Lui Ting.
Property conglomerate New World Development gained 7.6 percent, while Henderson Land advanced 6.2 percent.
Stocks in China, which edged up 0.1 percent to finish at a one-year high, were weighed upon by news of the government checking new lending to the stock market.
SINOPEC LAGS AFTER DEAR DEAL
Sinopec Corp underperformed, inching up 0.4 percent, as analysts deemed its parent's deal to buy Swiss oil explorer Addax Petroleum Corp for $7.24 billion, expensive and said it lowered the possibility of an asset injection into the listed company.
"China, at the state level, is moving to secure overseas oil assets and is willing to overpay to do so, but will the listed entity be exposed to the aggressive policy or pay a market-based value for those assets?" said CLSA analyst David Hewitt.
The offer price of C$52.80 per share was close to the highs scaled by the stock in June 2008 when crude oil was marching towards $150 per barrel.
Its mainland-listed shares rose 0.4 percent to 10.56 yuan in Shanghai.
The benchmark Hang Seng Index was up 382.88 points at 18,275.03, with shares worth HK$60.2 billion changing hands compared with Wednesday's HK$56.7 billion.
"The Fed's decision to keep rates near zero encouraged investors to cover shorts in interest-rate-sensitive stocks," said Alex Tang, research director with Core Pacific-Yamaichi International. "But the weak turnover suggests investors still believe the market is overvalued."
The China Enterprises Index, which represents top locally listed mainland Chinese stocks, climbed 2.2 percent to 10,763.76.
Exchange operator Hong Kong Exchanges & Clearing (HKEx) jumped 3.3 percent to HK$123.60, despite fickle turnover in recent sessions, on expectations of closer co-operation with the southern Chinese province of Guangdong.
On Wednesday, the vice-chairman of the Guangdong securities regulator suggested that the central government allow people in Guangdong to invest in Hong Kong's stock market.
Reports of strong new lending in China continued to drive up mainland property and banking stocks, with China Overseas Land up 5.7 percent at HK$17.92, while Bank of China rose 3.8 percent.
Trading in shares of Chinese steelmaker, Angang Steel Co Ltd, was suspended in late morning in Hong Kong and on the mainland as the stock climbed for a second straight session on Thursday after China said it had found Asia's biggest iron ore deposit in its northeastern region. The stock was up 3.22 percent prior to the suspension.
Xinyu Hengdeli, a China-focussed luxury watch retailer part owned by Swatch and LVMH, was the biggest percentage decliner on the main index after it fell 19.9 percent following a $81.6 million share placement.
SHANGHAI
The Shanghai Composite Index ended up 2.747 points at 2,925.046, after hitting a new intraday high for 2009 at 2,946.898.
Losing Shanghai A shares outnumbered gainers by 536 to 364, while turnover in Shanghai A shares slipped to 129.0 billion yuan ($18.9 billion) from Wednesday's 146.3 billion yuan.
"The index eased after hitting the new high (for the year). The 3,000-point level will be the first resistance level for the index where profit-taking will add pressure. The index might consolidate tomorrow," said Xiangcai Securities analyst Wu Nan.
Financial shares were mixed as the official Shanghai Securities News reported that China's banking regulator had sent out investigative teams last week to check whether bank loans were being illegally invested in the stock and property markets. [ID:nPEK239351]
Minsheng Bank rose 0.63 percent to 7.99 yuan after saying it had sold its entire holdings in Haitong Securities at an average price of 14.33 yuan, locking in profit. Haitong slipped 1.46 percent to 16.23 yuan.
Insurers outperformed, lifted by China Pacific Insurance, the country's third-biggest life insurer, which advanced 6.37 percent to 21.38 yuan after Shanghai Securities News cited a source close to the company as saying it had decided to restart a proposal to float shares in Hong Kong.
Metals shares were weak after leading gains on Wednesday, with Jiangxi Copper losing 1.7 percent to 31.85 yuan after surging by its 10 percent daily limit on Wednesday.
Shenyin & Wanguo Securities said in a research note that the index could move between 2,300 and 3,150 points in the second half of the year.
It projected GDP growth to hit 8.3 percent this year and 8.5 percent next year, and forecast the Chinese economy would enjoy a two year "honeymoon" with a V-shaped economic recovery, mild price rises, and ample liquidity as company earnings rose.
The brokerage kept its positive rating on the banking sector, where earnings are likely to beat expectations on robust new lending so far this year. Asset quality could stay stable in 2009 and 2010 and net profits could rise by 6 percent to 17 percent in 2010, it said. (Editing by Lucy Horby and Chris Lewis)