* Hang Seng up 1.5 percent, HSBC up 3.7 percent
* Energy counters rise as oil prices push towards $92/barrel
* Shanghai Composite Index up 0.6 pct
* Airlines up in Shanghai on profit forecasts, yuan
(Updates to close)
By Vikram S.Subhedar and Chen Yixin
HONG KONG/SHANGHAI, Jan 12 (Reuters) - Hong Kong stocks extended gains on Wednesday as a surge index heavyweight HSBC helped push the benchmark past some short-term technical resistance levels.
China's key stock index closed 0.6 percent higher in thin volume, underpinned by strength in airline and property issues.
The Hang Seng Index closed 1.5 percent higher , bringing its gains since the start of the year to 4.7 percent.
"HSBC has been trying to break out above $83 for the past week, and looks like it is finally succeeding," said Patrick Lee, a trading strategist at Daiwa Capital in Hong Kong.
"If the decisive break happens, this should push the HSI to close above 23,900."
Shares of HSBC Holdings , known locally as the "big elephant" because of its mammoth 15 percent weighting on the benchmark index, rose 3.7 percent on over 4 times its average 30-day traded volume.
The bank's shares have underperformed the Hang Seng Index for two years in a row, with 2010's near 11 percent decline, falling short of a mild 5.3 percent advance for the index.
Citigroup, which upgraded HSBC shares to "buy" from "hold", expects HSBC's new management to raise dividends in coming years and sees the bank as a key beneficiary in the development of the offshore yuan market.
In a sign that Beijing is increasingly promoting the use of the Chinese currency in major financial centres, Bank of China has offered yuan trading to U.S. customers. Shares of the state-owned bank rose 1.7 percent. [ID:nN11155355]
Meanwhile, energy counters rose for a second session,
helped by a surge in oil prices that took U.S. crude futures
PetroChina Co Ltd rose 1.9 percent. CNOOC Ltd gained 1.6 percent, and refiner China Petroleum & Chemical Corp (Sinopec) rose 2.1 percent.
SHANGHAI EDGES UP
The benchmark Shanghai Composite Index rose 0.6 percent to 2,821.3 points, extending a 0.4 percent rise on Tuesday.
It remains above the 125-day moving average, now at 2,771.8, a level which is expected to provide support in the near term.
Trading was lacklustre, with investors shying away from making big bets ahead of December economic data, including China's inflation, due on Jan. 20 and ahead of the Lunar New Year holiday, which starts on Feb. 2.
"Before investors get a clear (policy) direction, they will be very cautious. The low volume says it all." said Xu Yinghui, an senior analyst at Guotai Junan Securities.
Turnover hit a two-week low of 88 billion yuan ($13.3 billion).
Analysts said low valuations of property companies attracted buyers. Most of them expected these developers to show strong growth when they report 2010 earnings starting this month, despite periodic crackdowns on property speculation by Beijing last year.
The property sub-index ended 1.3 percent higher.
Gemdale , the fourth most active share on the Shanghai market, rose 0.8 percent, while Vanke , the country's biggest listed developer, inched up 0.4 percent.
Analysts said ample liquidity might support the index, especially after the central bank hinted there would be no imminent official tightening steps.
Central bank Deputy Governor Yi Gang said in remarks published on Wednesday that China should focus on increasing domestic demand and rebalancing its economy rather than relying on monetary policy to fight inflation.[ID:nTOE70A08L]
Airlines also outperformed, with Southern Airlines Co gaining 3.1 percent after it predicted a sharp jump in 2010 profit, and on yuan appreciation ahead of a state visit by China's President Hu Jintao to the United States on Jan. 18-21.
Air China rose 2.5 percent, while Hainan Airline was up 1.8 percent. ($1=6.618 Yuan) (Editing by Yoko Nishikawa)
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