* Hang Seng ends up 0.4 pct; pares losses in late rally
* Shanghai slides as profit-taking weighs on financials
* China Mobile results disappoint, shares drop 1.5 percent
* China economic data broadly in line with expectations (Updates to close)
By Vikram S.Subhedar and Jianxin Lu
HONG KONG/SHANGHAI, Oct 21 (Reuters) - Hong Kong stocks recouped losses in a late rally to end higher on Thursday, led by banking and technology shares, but disappointing results from telecom giant China Mobile capped the benchmark's gains.
Shanghai's benchmark stock index finished 0.7 percent lower, with weaker turnover suggesting investors were growing cautious after recent gains.
Banks provided the biggest boost to the Hong Kong market, continuing a trend seen in recent weeks as investors chased laggards in a rising market, drawn by attractive valuations.
The Hang Seng index ended 0.4 percent higher at 23,649.5 points on relatively light turnover after trading in the red for most of the day.
Late buying in financials, resources and technology counters offset declines in telecom stocks following China Mobile's lacklustre third-quarter results on Wednesday.
"We are seeing some rotational buying. People are shifting from properties to banks and insurance companies," said William Lo, senior analyst at Ample Finance Group.
Mainland banking shares listed in Hong Kong have staged a strong comeback since mid-September as robust growth in lending, cheap valuations and a global stock market rally attracted a flood of institutional buying.
China Construction Bank rose 1.8 percent, the biggest positive impact on the Hang Seng.
CCB is trading at a 20 percent discount to its historical median forward 12-month price-to-earnings multiple of 12.3, Thomson Reuters Starmine data showed.
Insurers China Life and Ping An rose 1.3 percent and 3 percent, respectively, extending the previous sessions gains on hopes that their investment income would benefit in an environment of rising interest rates.
China surprised markets early this week with its first interest rate rise in three years.
Gains in financials were able to offset a broad weakness in telecoms which had pegged back the Hang Seng for most of the day.
China Mobile, the world's largest mobile operator and a heavyweight on the index, reported results that pointed to a slowdown for sector, dragging its shares and those of its rivals lower.
China Mobile shares fell 1.5 percent, while rival China Unicom slipped 1.2 percent.
"Competition in the telecommunications industry is very keen and these companies have to spend a lot to lure new subscribers. They have to subsidize new cell phone users through free cellphones or lower fees," said Alfred Chan, chief dealer at Cheer Pearl Investments.
SHANGHAI SLIPS
The Shangai Composite ended lower at 2,983.5 points.
Financial stocks, which have led a rally on the Shanghai bourses this month and carry heavy weightings on benchmark indexes, led the market lower, succumbing to profit-taking and worries over further monetary policy tightening.
The finance sub-index has gained 19 percent this month compared with a 12 percent gain for the Shanghai Composite.
Shares of Agricultural Bank of China, the most actively traded counter on Thursday, slumped 3.4 percent, Everbright Bank closed down 4.9 percent and ICBC dropped 1.7 percent.
The People's Bank of China unexpectedly raised official lending and deposit rates late on Tuesday, a move that could cause an outflow of money from stocks to bank deposits and fixed income products.
The PBOC also conducted a large amount of bond repurchase agreements and sold three-month bills at a higher yield on Thursday, showing it intends to back up its recent rate increase by tightening liquidity in the financial system.
China released a flurry of economic data earlier on Thursday which was broadly in line with expectations, with the numbers in fact being something of a downside surprise after market chatter that inflation had been stronger than expected.
China's growth ebbed in the third quarter to 9.6 percent year-on-year while inflation edged just a touch higher, showing that the world's second-largest economy was strong but far from overheating and suggesting that an interest rate rise this week may be enough for now.
Turnover for Shanghai A shares dropped to 204 billion yuan ($31 billion) from Wednesday's 261 billion yuan. ($1=6.65 Yuan) (Additional reporting by Jun Ebias in HONG KONG; Editing by Kim Coghill)