* Hang Seng fails to hold gains; short-selling picks up
* Shanghai up 1.5 pct; finds support in 2,655-2,700 region
* Resource counters rebound as commodity prices rise
* Banks, developers hit by more China property curbs
(Updates to close)
By Vikram S.Subhedar and Chen Yixin
HONG KONG/SHANGHAI, Jan 27 (Reuters) - Chinese shares rose for a second day on Thursday as Shanghai's main stock index bounced off of a key chart support and gains in commodity-related and telecom counters offset weakness in property.
Property shares underperformed after China announced fresh steps to cool the real estate market. The sector sub-index fell 1.5 percent.
But gains in Shanghai failed to lift the Hong Kong market, which closed in the red despite earlier gains as a pick-up in short-selling activity suggested investors were looking to sell into any strength. The Hang Seng fell 0.3 percent.
Cyclical plays such as shippers, mining companies and energy firms rose as commodity prices made a comeback after U.S. Federal Reserve policymakers voted unanimously to maintain a $600 billion bond-buying plan to fuel an economic recovery.
Shanghai's key stock index closed up 1.5 percent to 2,738.1 after finding support between the 2,655 to 2,700 range, where a gap had opened up in October 2010.
This range is widely seen by market players as a level for the index to hold and a breach could open the way for a deeper slide that will hit other regional markets, said analysts.
"Most of the negative news has been priced in. The index may bounce slightly in the last three trading days before the holiday," said Zhang Yanbin, an analyst Zheshang Securities in Shanghai.
Chinese markets will be closed for a week from February 2 for the Lunar New Year holiday.
The index is down 2.1 percent this year and is North Asia's worst performing major market as a shortage of funds in the financial system and fears over tightening hobbled any chances of a sustained rebound.
"The reason for today's rise is that the index has fallen too much over the past several days," said Wang Aochao, a senior analyst at UOB Kay Hian in Shanghai.
"But we don't think it is a real rebound for the index as there are many uncertainties."
Gemdale , the most active stock on the Shanghai market, dropped 3.5 percent, while Shenzhen-listed China Vanke , the country's biggest developer, lost 2.5percent.
Offsetting that weakness were strong gains in small-caps which attracted speculative interest for a second day and nonferrous metals firms after copper prices rose.
Jiangxi Copper Co rose 3.8 percent, while Yunnan Copper was up 5.4 percent.
SHORT-SELLING UP IN HK
A pick up in bearish bets on the Hong Kong stock exchange over the past two sessions and overall light turnover suggested investors remained wary.
"China-related property names were weak and highly shorted on the back of China tightening on measures on properties," said a Hong Kong-based trader at a large European bank.
China Overseas Land fell 4.9 percent and 16 percent of the total turnover by midday was sold short, exchange data showed. China Resources Land fell 3.7 percent with short-selling amounting to 24 percent of its turnover at midday.
Bearish bets on the most widely watched China exchange traded fund, the iShares FTSE A50 tracker , have risen to their highest level in about six months, according to Data Explorers.
Bucking the trend, commodity-related counters helped limit losses in Hong Kong.
Container shipping and port operators were outperformers on hopes that a sustained U.S. recovery would boost demand.
China Merchants Holdings rose 6.1 percent, its sharpest single-day gain in more than 18 months. Cosco Pacific rose 3 percent on healthy volume.
With utilisation rates back to pre-crisis levels as overseas retailers become more willing to commit larger orders, port operators should regain pricing power, said analysts at Goldman Sachs in a note to clients. (Editing by Robert Birsel) Pan-Asia...... Japan........ S.Korea.... S.E. Asia............ Hong Kong... Taiwan..... Australia/NZ......... India....... China......
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