(Refiles to give full company name in third paragraph)
* Hong Kong shares up 0.76 pct, oil and banking plays support
* Shanghai edges up 0.1 pct, PetroChina offsets property losses
* Cement makers outperform in Hong Kong (Updates to midday)
By Emma Ashburn and Clement Tan
HONG KONG, March 24 (Reuters) - Hong Kong shares traded higher on Thursday morning, supported by oil companies and steady gains in banks as earnings continued to be in focus.
The benchmark Hang Seng Index was up 0.76 percent by the midday trading break. CNOOC Ltd , China's top offshore oil producer, gained 2 percent after posting late on Wednesday its best-ever fourth-quarter profit, beating analyst forecasts.
"The company also warned of escalating costs, but it's an upstream producer, so should be less exposed than the other China oil companies," said Wing Fung Financial Group head of research Mark To.
Banks continued to do well, with China Construction Bank Corp , Industrial and Commercial Bank of China Ltd and Bank of China Ltd , expected to announce earnings later on Thursday, all gaining. Barclays Capital said it expected Chinese banks to achieve a 35 percent net profit growth on average.
Chinese cement producers outperformed. Anhui Conch Cement Co Ltd , up 5.3 percent, nearing an all-time high and China National Building Material Co Ltd up 5.1 percent.
"Cement prices are higher than previously expected, so stocks are now undervalued," said Andre Chang, an analyst with RBS in Taiwan. "We expect the rally to have at least 20-40 percent on the upside from here for the next three to six months," he said.
PETROCHINA OFFSETS SHANGHAI PROPERTY LOSSES
The Shanghai Composite Index was up 0.1 percent BY midday Thursday at 2,951.3 points, with profit-taking in property counters offset by a strong showing from China's largest listed company Petrochina Co Ltd . The property sub-index was down 0.5 percent in mild profit-taking after gaining 2.7 percent on Wednesday as the central government said it would reduce purchase and rental fees for affordable housing from May 1. The largest listed property company China Vanke Co Ltd was flat.
China property stocks were the cheapest mid-cap sector and remained the top sector pick in 2011, BNP Paribas Securities analyst Erwin Sanft wrote in a research note. Petrochina firmed 1.9 percent after announcing that its first liquid natural gas terminal was slated to receive its initial cargo in April.
Xinjiang Guanghui Industry Co Ltd , another natural gas producer, rose 2.4 percent. Banks eased 0.3 percent in light volume before earnings announcements for large-cap lenders start later today with Bank of China Ltd <601988.SS, which gained 0.3 percent. "Bank earnings are expected to be very good, so share prices are not going to fall significantly," said China Development Bank Securities analyst Chen Shaodan in Beijing. The HSBC flash manufacturing purchasing managers' index showed that Chinese factories increased production this month, while their price increases slowed, pointing to easing inflationary pressure. "Despite small signs of easing, larger inflationary pressures still exist and pose a risk to banks. The market will move in a small range for a while as this kind of trend is very difficult to change," Chen said. (Editing by Chris Lewis)
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