* Hang Seng edges up after Wednesday's 1.4 pct drop
* Still, HSI seen up 19 percent by end-2011 - Reuters poll
* Shanghai slips as Shenhua, Sinopec lead energy decline
* Railway issues surge on govt plan for high-speed rail (Updates to close)
By Vikram S.Subhedar and Farah Master
HONG KONG/SHANGHAI, Dec 9 (Reuters) - Shanghai shares slipped to a two-month low on Thursday as a fall in energy stocks offset strong gains by railway-related issues off the back of government infrastructure plans.
Hong Kong's Hang Seng rose a mild 0.3 percent in low volume, recovering some of Wednesday's 1.4 percent drop. The index was supported by a 3.4 percent rise in China Unicom and a 1 percent increase in index heavyweight HSBC .
The Hang Seng has been largely rangebound since mid-November, but brokers expect the benchmark to gain about 19 percent by the end of 2011, boosted by China's economic growth and capital inflows flooding into Asia, a Reuters poll shows. [ID:nTOE6AS05S]
Shanghai's key stock index fell 1.3 percent to close at its lowest level since early October and below the closely-watched 250-day moving average for a second successive session.
Oil major Sinopec Corp dropped 1.3 percent. The world's most valuable coal producer, China Shenhua Energy Co Ltd , slipped 1.6 percent.
Buyers stayed away from banks, such as Industrial and Commercial Bank of China , which fell 0.9 percent to be the biggest drag on the index.
"No one wants to take a risk with all the rumours of a rate rise going around," said Li Wenhui, analyst at Huatai Securities in Nanjing.
Speculative investors, awaiting inflation data due on Saturday, are cautiously selecting sectors they see as safe bets in the near term, with many keeping to the sidelines while they await clarification of the government's monetary policy.
"Everybody is just waiting. This is a sensitive period with high inflation expected and a likely interest rate rise," said Ren Chengde, an analyst at Galaxy Securities in Shanghai.
Buyers are therefore going to focus on sectors such as rail and steel, which will benefit from Beijing's plan to invest up to 4 trillion yuan in the country's high speed rail network. [ID:nTOE6B606T], the analyst said.
Indeed, railway-related issues bucked the trend in both volume and prices in Shanghai and Hong Kong.
Railway manufacturer Jinxi Axle jumped to its 10 percent limit, while China Railway Erju gained 7.3 percent. In Hong Kong, China Railway shares rose 6 percent.
In contrast, Air China shares slumped 6 percent in Hong Kong on speculation a high-speed rail network would eat into the carrier's market share.
Among the Hang Seng's 45 constituents, China Unicom was the top performer, rising by 3.4 percent.
The firm, China's No.2 mobile operator, more than halved the monthly subscription rate for its entry-level 3G mobile package in a bid to increase its customer base. [ID:nTOE6B706L]
Hong Kong turnover was the lowest of the past 8 sessions as investors kept to the sidelines ahead of China's Central Economic Work Conference, the annual meeting this month of the country's top leaders to chart economic policies for the next year, and economic data this weekend, said traders at Daiwa Capital in a note to clients.
Citic Pacific fell 2 percent after brokerage Morgan Stanley downgraded the stock to equal-weight from overweight. ($1=6.66 yuan)
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