* Shanghai shares up 0.6 percent; coal, resources plays rise
* HSI weaker in light turnover; bank results eyed
* China Life slumps 4.7 pct as results, outlook disappoint (Updates to midday)
By Vikram S.Subhedar and Lu Jianxin
HONG KONG/SHANGHAI, Aug 26 (Reuters) - Stocks in Shanghai rebounded on bargain-hunting after the previous session's sharp slide, with resources counters such as coal and other materials finding favour among investors.
The mainland gains helped Hong Kong's Hang Seng Index recover from earlier losses, although a slump in China Life Insurance Co Ltd's pegged back the broader market.
The benchmark Shanghai Composite Index had edged up 0.6 percent to 2,611.7 points by midday on Thursday, recovering part of Wednesday's losses and holding near the psychologically important 2,600-point level. On Wednesday, the index had fallen 2 percent to below 2,600 points as discouraging U.S. data stoked fears of a double-dip recession.
Technical charts show near-term support at the index's 60-day moving average of 2,554 and resistance at the 120-day moving average of 2,738.
Worries about a global recession have heightened recently because of persistently weak economic data from the United States and Japan, but analysts said concern over the impact of a slowing global economy spilling over into China could still be overdone.
"Market conditions are generally stable so long position holders are seeking bargains after yesterday's fall," said Central Securities analyst Zhang Gang in Shanghai. "There is not much cause for worry about the health of China's economy anyway for now."
News that the People's Bank of China was set to mop up a net 91 billion yuan ($13 billion) from the banking system due to its heavy open market operations on Thursday did not have a major impact on stock trading.
"The central bank appears neutral in its recent liquidity management," said Chen Shaodan, a senior analyst at China Development Bank Securities in Beijing. "Its liquidity drain this week comes only after a net injection last week."
All of the about 30 coal companies listed on the Shanghai and Shenzhen exchanges rose on Thursday, with Zhengzhou Coal Industry and Electric Power Co Ltd jumping to its 10 percent daily limit.
HK FLUCTUATES
Hong Kong shares moved in a thin 95-point range on light volume as trading remained choppy ahead of the expiry of August futures contracts next Monday.
The benchmark Hang Seng Index ended Thursday morning 0.07 percent lower at 20,619.79, weighed down by a 4.7 percent slide in China Life Insurance Co Ltd.
China Life, the world's most valuable insurer, posted a 27 percent slide in second-quarter profit and warned of more market uncertainty ahead, sending its shares to their lowest level in more than 13 months.
Local property plays and defensive sectors such as telecommunications and utilities were slightly higher although lacklustre turnover suggested investors remained cautious with the Hang Seng Index having lost well over half the gains from its July 6 to Aug. 9 rally.
"I think the short-sellers are willing to get a little more aggressive and will look to sell into rallies," said a Hong Kong-based sales trader.
Short-selling as a percentage of total turnover has ticked higher each day this week to the highest level in eight days.
Market players are awaiting interim results from key mainland banks Industrial and Commercial bank of China Ltd (ICBC) and Bank of China Ltd for cues on the health of China's banking sector, often considered a proxy for the country's economy.
Investors are focussing on how large Chinese banks, now among the most valuable in the world, are coping with rising bad loans, slowing interest margin recovery and the impact of a tightening regulatory environment. (Editing by Chris Lewis)