(Refiles to move extra words at top of story)
* Hong Kong gains 1.3 pct; Shanghai down 0.2 percent
* Oil counters rebound on bargain hunting in HK
* Automakers drop on tax worries in China
* Turnover remains thin on global risk aversion (Updates to close)
By Jun Ebias and Farah Master
HONG KONG/SHANGHAI, Nov 29 (Reuters) - Hong Kong stocks rebounded from an eight-week low on Monday as investors scooped up beaten-down shares such as oil firm PetroChina Co Ltd , while Shanghai extended its recent losses.
But turnover in both centres remained sluggish, indicating most investors were still unwilling to make new bets amid worries about what policy steps China will take next to bring down inflation, which hit a 25-month high in October.
"Investors are still cautious about China's monetary tightening and the U.S. dollar is strengthening as investors worry about the financial deterioration in some of the European countries," said Peter So, research head at CCB International, referring to Europe's weekend move to endorse an 85 billion euro aid package for debt-stricken Ireland.
Investors were sceptical that the rescue deal will prevent the euro zone debt crisis from engulfing Portugal and Spain.
"In December, when most of this news is digested, there will be another buying opportunity," So added.
Dealers expect at least a 25-basis point interest rate rise in China in December, and more increases in banks' reserve ratios next year as part of Beijing's efforts to keep lending growth from fueling inflationary pressures.
The benchmark Hang Seng Index finished the session up 1.3 percent at 23,166.22 points.
The Shanghai Composite Index ended down 0.2 percent at 2,866.4, extending its fall below the 250-day moving average, now at 2,880 points.
In Hong Kong, PetroChina jumped 3.1 percent as a rebound in oil prices inspired some bargain hunting, dealers said.
The stock has shed 11 percent in the last two weeks, underperforming the broader market, and hit a two-month low on Friday. The HSI has fallen 7 percent during the same period, echoing a global retracement as investors reduced exposure to riskier assets and booked profits heading into the year end.
Chinese automakers, particularly those with a tie-up with foreign companies, such as Dongfeng Motors , dropped since these firms would no longer be exempted from paying some taxes including the city construction tax from Dec 1.
Dongfeng slid 5.3 percent and GAC Group dropped 8.2 percent.
Exporter Li & Fung added 4.7 percent to hit a record high, extending last week's gains, as the start of the U.S. holiday shopping season saw brisk consumer spending.[ID:nN2529414]
Turnover fell for a fourth straight day to HK$65 billion ($8.4 billion), the lowest in more than two months.
SHANGHAI EXTENDS LOSSES 0N THIN VOLUME
Volume in Shanghai has also slumped, with investors taking profits after the market jumped 12 percent in October from the previous month.
Analysts said that while policy-obsessed investors are on guard for new measures from Beijing, the chance of further big drops should be limited due to strong corporate earnings and solid domestic economic growth.
"Sentiment is very weak with inflation relatively high andauthorities moving to implement monetary tightening measures and stabilise commodity prices," said Cao Xuefeng, analyst at Huaxi Securities in Chengdu.
China's central bank has increased banks' reserve requirements five times this year as well as raising benchmark interest rates in October for the first time in three years.
Commodity related stocks were lower on a stronger U.S. dollar, with investors cutting their holdings in oil and coal stocks that had soared in October's liquidity fueled rally.
"All large caps are dropping, particularly oil which is down on a rebound in the dollar. The many problems in the global economy are unsettling investors," said Chen Shaodan, analyst at China Development Bank Securities in Beijing.
Heavily weighted Sinopec slipped 0.1 percent after falling more heavily earlier in the session.
Steel maker BaoSteel , one of the biggest drags on the index, dropped 0.8 percent.
Profit taking also pushed autos lower with SAIC Motor Corp down 1.8 percent.
Volume slid despite active buying in small cap pharmaceuticals, as investors eyeing government support as a reason to buy in.
Pharma firm Tibet Rhodiola Pharmaceutical Holding jumped its 10 percent limit and Henan Lingrui Pharmaceutical rose 8.5 percent.
Turnover of Shanghai A shares dropped to 133 billion yuan from 143 billion yuan on Friday. (Editing by Kim Coghill)
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