* Shanghai shares ease 0.2 percent after Monday's jump
* Profit-taking, tighter liquidity conditions weigh
* Hang Seng Index up 0.1 percent, turnover at 3-½ month low
* Energy, materials issues outperform on weak dollar, economy
* China Mobile slips as traders favour rival Unicom (Updates to midday)
By Vikram S.Subhedar and Farah Master
HONG KONG/SHANGHAI, Dec 14 (Reuters) - Hong Kong stocks were up slightly in thin trade by midday Tuesday, while Shanghai's key stock index had slipped on profit-taking after Monday's rally, and as tighter liquidity weighed.
Shanghai's key index had surged on Monday after China's central bank skipped an expected interest rate rise, opting instead to further increase bank reserve requirements, aiming to rein in inflation that hit a 28-month high November.
China's key money market rate, the main barometer of short-term liquidity supply, jumped early on Tuesday, with traders citing worries of another rise in bank reserve requirements this year.
"While there was short-term clarity after the rise in reserve requirements, investors are on guard against further tightening measures," said Guotai Junan Securities analyst Xu Yinhui in Shanghai. "Controlling inflation has become the prominent policy theme, so the authorities are going to continue to step up with more severe measures."
The high benchmark seven-day government bond repurchase rate suggested that major banks were reluctant to lend money, deterring borrowers including brokerages, mutual funds and insurers, among other stock players.
The Shanghai Composite Index was down 0.2 percent at 2,917.2 points by the midday trading break, holding above the 250-day moving average, now at 2,863 points.
Profit-taking emerged among heavyweight commodities plays, Monday's top gainers. Oil major China Petroleum & Chemical Corp (Sinopec) was the biggest weight on the index, falling 1 percent. Banks also dropped, with Industrial and Commercial Bank of China Ltd down 0.5 percent and China Merchants Bank Co Ltd down 0.6 percent.
HONG KONG SUBDUED
Hong Kong's markets held within a narrow range on Monday as midday turnover fell to its lowest since the last week of August, signalling that the holiday season slowdown in trading activity could have begun.
The benchmark Hang Seng Index was up 0.08 percent at 23,336.89. Energy shares led, with coal major China Shenhua Energy Co Ltd, up 2.1 percent, and oil major CNOOC Ltd up 0.6 percent.
One trader at a Japanese bank in Hong Kong said the upside for the Hang Seng Index was capped at 23,600, the highest level hit earlier this month.
The benchmark index would likely see rangebound trading but a break on the upside for the Shanghai Composite could lead the way for Hong Kong too, said the trader.
China Mobile Ltd, which has an almost 10 percent weighting on the benchmark, fell 0.5 percent and was second biggest drag on the day.
Traders preferred rival China Unicom (Hong Kong) Ltd, up 1.4 percent, as one agency broker executed a pair trade -- long China Unicom and short China Mobile -- earlier in the day.
China Unicom is seen benefitting in the short term after it introduced a cheaper 3G plan to draw customers, and from its position as Apple Inc's sole partner in China for the popular iPhone. (Editing by Chris Lewis)