* Chalco at 5-month high, Jiangxi Copper at 8-month high
* Losses in manufacturers offset gains in resources in China
* Boshiwa soars 41 pct above issue price in market debut (Updates to close)
By Sui-Lee Wee and Farah Master
HONG KONG/SHANGHAI, Sept 29 (Reuters) - Hong Kong stocks rose to an eight-month closing high on Wednesday for the second-last session of the quarter, driven by buying of index heavyweights ahead of the expiry of futures settlement contracts, and underpinned by gains on Wall Street.
China's key stock index ended flat, reversing a 0.9 percent rise earlier in the session, with a sell-off in manufacturing companies checking gains in resource issues such as Sichuan Western Resources Holding Co Ltd.
In Hong Kong, resources shares were among the biggest winners, with Aluminum Corp of China Ltd (Chalco) rising to a five-month high on hopes its parent would inject its majority stake in a rare earths company into the listed company. Jiangxi Copper Co Ltd soared to its highest in more than eight months after copper closed near a five-month peak on Tuesday.
Abundant liquidity and enthusiasm about the upcoming initial public offering of AIA Group would boost the performance of the market in the upcoming quarter, dealers said.
"The fourth quarter will be better than the third quarter," said Ben Kwong, chief operating officer at KGI Asia. "The weakness in the U.S. dollar will continue to push funds into relatively risky assets."
"But in between, we expect a significant correction," he said. "I would not recommend buying at this moment. All these shares are overvalued."
The benchmark Hang Seng Index, which is poised to post its best monthly gain since July 2009, ended up 1.22 percent or 268.72 points at 22,378.67.
A four-week rally supported by recovering turnover had taken the index well into overbought territory. The index's 14-day Relative Strength Index had rebounded to 71 by midday Wednesday, indicating the market is now overbought.
The index looks set to finish the third quarter with a rise of 11.2 percent. It is up 2.3 percent this year.
The China Enterprises Index of top locally listed mainland Chinese stocks closed up 2.04 percent at 12,429.28.
Children's garment maker Boshiwa International Holding Ltd closed its first day of trade at HK$7.02 versus its IPO price of HK$4.98 per share.
SHANGHAI REVERSES
The Shanghai Composite Index ended at 2,610.68, edging down 0.03 percent, with the 60-day moving average at 2,560 providing a firm floor ahead of a week-long national holiday starting on Friday.
China's stock market has so far gained 10 percent in the quarter ending in September, as it recovered following the mega-listing of Agricultural Bank of China Ltd.
One of the world's worst performing bourses, the Shanghai market is still down 20 percent so far this year, with China's clampdown on bank lending and the property market having taken a toll.
Analysts say investors are cautious that the central bank will continue to tighten liquidity policy in a measured way, although most agree there is no near-term risk of an increase in official deposit and lending rates.
Concerns over a further round of property tightening are also in the background.
"Earlier gains were triggered by strength overnight in overseas markets, but for now a fall back is expected," said Cheng Yi, analyst at Xiangcai Securities in Shanghai.
"Investors expect a second round of property controls as the initial ones have not resulted in significant falls, the uncertainty remains as to how severe policies will be," Cheng said.
Manufacturers fell, with Yue Yang Paper Co Ltd down 7.4 percent. Electrical equipment manufacturer Zhejiang Yankon Group Co Ltd fell 5.9 percent, while Beijing Xidan Department Store Co Ltd dropped 6.3 percent.
"Commodity issues are pulling the index higher today after profit-taking in yesterday's session," said Chen Shaodan, analyst at China Development Bank Securities, in Beijing.
Zhengzhou Coal Industry and Electric Power Co Ltd rose 3.2 percent while Datong Coal Industry Co Ltd gained 6.4 percent.
Turnover of Shanghai A shares slipped to 105 billion yuan ($15.7 billion) on Wednesday from 113 billion yuan on Tuesday.
Falling shares outnumbered winners 617 to 275. (Editing by Chris Lewis)