Share prices were higher midmorning as China banks gained after more mainland lenders projected strong earnings growth for the first-half of the year.

China telecom stocks, including heavyweight China Mobile, were supported as investors took note of a stronger Shanghai bourse, while local property developers attracted some bargain-hunting after recent falls.

China Merchants Bank was up 3.5 pct after projecting over 100 pct growth in first-half net profit, while China CITIC Bank was up nearly 2.6 pct after forecasting over 150 pct rise in first-half earnings.

At 11:12 am, the Hang Seng index was up 327.42 points or 1.53 pct at 21,751.24, off a low of 21,402.70 and high of 21,755.14.

Turnover was 17.37 bln hkd.

"China's markets appear to be stabilizing and this is supportive of our market, together with forecasts of strong first-half earnings by some major mainland banks," said Castor Pang, strategist at Sun Hung Kai Financial Group.

He also noted hopes that the US markets may gain when they resume trade today after a long weekend. The US markets were closed last Friday for a public holiday.

"Wall Street has been oversold and many people expect that market to recover," said Pang.

"While our market might see some gains today, I believe these will be capped by worries of a further increase in crude oil prices in the near term," he said.

OPEC president Chakib Khelil has forecast that oil prices will continue to go up due to the US dollar weakness.

Pang said trade will be cautious as investors alo await second-quarter results from major US corporations and speeches by key US officials, including Federal Reserve chairman Ben Bernanke, this week.

Aluminum producer Alcoa Inc and General Electric are among companies reporting this week.

China banks were higher after more lenders forecast strong first-half earnings.

China CITIC Bank was up 0.11 hkd or 2.57 pct at 4.39 after news that it expects its first-half net profit to be up more than 150 pct year-on-year due to increasing net interest margins, intermediary business income and a lower effective tax rate.

China Merchants Bank rose 0.80 hkd or 3.5 pct to 23.65 after it said that it estimates its first half net profit must have expanded by more than 100 pct from a year earlier.

Among other mainland lenders, ICBC gained 0.06 hkd or 1.17 pct at 5.17, Bank of Communications was up 0.18 hkd or 2.08 pct at 8.84 and China Construction Bank added 0.03 hkd or 0.51 pct at 5.95.

ICBC projected more than 50 pct earnings growth last week.

Large-caps traded mixed, with HSBC down 1.0 hkd or 0.84 pct at 117.60, Hong Kong Exchange and Clearing down 1.0 hkd or 0.93 pct at 106.10 and Hutchison Whampoa up 0.25 hkd or 0.31 pct at 80.50.

Among China telecom stocks, China Mobile gained 1.0 hkd or 0.96 pct at 104.80, China Unicom rose 0.04 hkd or 0.4 pct to 15 and China Telecom was up 0.04 hkd or 1.02 pct at 3.96, while China Netcom was down 0.10 hkd or 0.45 pct at 22.20.

China airlines were sharply higher on talk that Beijing may expand the weekend charter flights to Taiwan to daily services by the end of the year.

"Crude oil prices have fallen in Asian trade and this also helped boost interest in airline counters," said Francis Lun, general manager at Fulbright Securities.

Among China airlines, Air China surged 0.22 hkd or 6.2 pct to 3.77, China Eastern rose 0.07 hkd or 3.14 pct to 2.30 and China Southern was up 0.14 hkd or 4.83 pct at 3.04.

Cathay Pacific was down 0.06 hkd or 0.43 pct at 13.92.

Properties were mostly higher despite news that more local banks raised their mortgage rates.

"This sector has been oversold and the gains that we're seeing today can be attributed mainly to a technical rebound," Fulbright Securities' Lun said.

Cheung Kong rose 2.10 hkd or 2.04 pct to 105, Henderson Land was up 1.05 hkd or 2.28 pct at 47.10, Sun Hung Kai was up 3.10 hkd or 2.96 pct at 108 and Sino Land gained 0.30 hkd or 2.1 pct at 14.58.

China Railway Group was up 0.03 hkd or 0.56 pct at 5.38 following news that its units have won 2.95 bln yuan worth of construction contracts.

Among local banks, Hang Seng Bank fell 0.20 hkd or 0.13 pct to 152.70, while Bank of East Asia slipped 0.70 hkd or 1.78 pct to 38.65.

Bank of East Asia is raising mortgage rate for new homebuyers by 25 basis points from today.

Chong Hing Bank lost 0.02 hkd or 0.1 pct at 19.18 after news that it is also raising its rates for new mortgage loans by 25 to 37.5 basis points from today.

Trading in shares of China Oilfield Services, a unit of China National Offshore Oil Corp, was suspended pending an announcement related to a possible major transaction.

COSL also sought trading suspension in Shanghai.

The South China Morning Post reported that COSL may announce today the acquisition of Norway-based rival Awilco Offshore ASA.

The China Enterprises index was up 290.74 points or 2.59 pct at 11,515.92.

(1 usd = 7.8 hkd)