* Hang Seng Index up 0.7 percent, Shanghai rises 1.2 percent
* China CPI at 28-month high, rate rise concerns linger
* Railway, energy issues support indexes
* Mild pick-up in Shanghai turnover, HK volume subdued (Updates to midday)
By Vikram S. Subhedar and Farah Master
HONG KONG/SHANGHAI, Dec 13 (Reuters) - Shares in Shanghai and Hong Kong rose on Monday after last week's mildly weaker close, partly on relief that China's central bank raised bank reserve requirements instead of benchmark interest rates.
Hong Kong's benchmark Hang Seng Index had risen 0.7 percent by mid-morning to 23,314.6, led by energy plays and local property developers.
The Shanghai Composite Index was up 1.15 percent at 2,873.84 by the midday trading break.
Chinese inflation data released on Saturday exceeded forecasts, reaching a 28-month high and showing signs of spreading beyond food prices, putting pressure on the government to take stronger steps to tame prices.
The lingering possibility of an imminent interest rate rise is likely to keep a lid on Chinese stock market gains.
"The rise in reserve requirements was better than a rise in interest rates, which was what investors had feared. The index is now having a chance to regain. I don't see a high chance of an interest rate rise by the end of this year now," said Huaxi Securities analyst Cao Xuefeng in Chengdu.
Turnover picked up in Shanghai from lacklustre levels in recent weeks but remained subdued in Hong Kong, with investors still unwilling to make large bets and take on risk heading toward year-end.
Energy counters supported both markets. Heavyweight China Petroleum & Chemical Corp (Sinopec) up 2.8 percent in Hong Kong as oil prices were steady to higher after the Organisation of Petroleum Exporting Countries (OPEC) agreed to keep crude output levels unchanged.
Railway stocks extended last week's gains as buying interest continued on government plans to develop the country's high-speed rail network.
Railway car manufacturer Jinxi Axle Co Ltd and train wheel maker Taiyuan Heavy Industry Co Ltd, jumped by their 10 percent trading limits.
Property developers rose in Hong Kong on reports that secondary home sales had picked up to levels seen before the government raised stamp duty to deter speculation.
Sun Hung Kai Properties Ltd rose 1.6 percent, while Hang Lung Properties Ltd was up 1.3 percent. Li Ka-shing controlled Cheung Kong (Holdings) Ltd was up 1 percent.
Sustained weakness in transportation stocks other than railways put pressure on the China Enterprises Index, which underperformed the broader market.
Air China Ltd fell 3.2 percent, extending last week's 12.5 percent drop. Guangzhou Automobile Group Co Ltd fell 3 percent, the top loser on the China Enterprise Index.
The index of top Hong Kong-listed mainland companies is down 0.9 percent this year compared with a 6.4 percent rise for the Hang Seng Index, reflecting the impact of China's moves to cool the economy earlier this year. (Editing by Chris Lewis)