Hong Kong, China shares boosted by strong earnings - Reuters

(Updates to close)

* Hang Seng up 1.5 pct, Shanghai jumps 2.9 pct

* China Unicom surges after better-than-expected interim earnings

* Low volume suggests investors still wary of riskier assets

* Investors pile into large caps, boosting Shanghai

By Clement Tan

HONG KONG, Aug 25 (Reuters) - Shares in Hong Kong and Shanghai rose on Thursday after several Chinese firms reported forecast-beating earnings, but the lowest turnover in over three weeks suggested investors remained worried about whether this week's rebound can be sustained.

Strong earnings posted by China banking heavyweights after the close could boost the market further on Friday, though players will likely to be reluctant to take on fresh positions ahead of a much-awaited speech by Federal Reserve Chairman Ben Bernanke.

The Hang Seng Index ended up 1.5 percent at 19,752.5 points, while the Shanghai Composite Index rose 2.9 percent to 2,615.3, clawing back some of the heavy losses suffered in recent weeks amidst a global market rout.

"It's still a little too early to take on that much risk...I don't see this rebound as signalling a reversal," said Hong Hao, a global strategist with CICC in Beijing.

"The market is oversold so there would always be technical rebounds, so the question is whether you want to chase the rebound, trade with the rebound or use it as an exit opportunity," he added.

Some market watchers have attributed much of the gains in global markets this week to short covering after recent heavy selling, rather than fresh buying. Further unwinding of positions may be seen ahead of Bernanke's speech on Friday which will be closely watched for any clues on whether the Federal Reserve is planning fresh stimulus for the ailing U.S. economy.

The Hang Seng's gains were led by China United Network Communications Ltd (Unicom) , which surged more than 12 percent in Hong Kong in about 4 times its 30-day average volumes after first-half profits beat expectations.

The only operator in the mainland selling Apple's iPhone has been struggling to expand profit substantially because of heavy subsidies aimed at attracting a large user base at the expense of profitability.

But Nomura analysts said the company has now successfully lowered the retail price of low-end smartphones to below 1,000 yuan, believing this could in turn benefit telecommunications equipment makers with China Unicom ties such as ZTE Corp and Lenovo Group Ltd , whose shares rose about 7 and 2 percent on the day, respectively.

After the close, Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China (AgBank) also announced strong profit growth, with ICBC beating estimates and Agbank coming roughly in line with expectations.

Turnover on the Hong Kong bourse was weak, however. At about HK$65 billion ($8.3 billion), it was the lowest in more than three weeks. China Unicom alone accounted for about HK$2 billion.

LARGE CAPS BOOST SHANGHAI IN STRONG TURNOVER

China Unicom was also among the top boosts to the Shanghai Composite Index as investors piled into companies that reported strong earnings, driving A-share turnover to its highest in more than two weeks.

The Shanghai benchmark posted its best single-day performance in more than 10 months, with China Unicom jumping 6.8 percent. It was also the third most active stock in Shanghai.

Several heavyweights scheduled to announce interim earnings after markets close on Thursday also saw gains as investors bet on strong results.

Among them were PetroChina Co Ltd , ICBC and China COSCO Holdings Co Ltd .

Analysts said mainland markets were also boosted by local media reports that China South Locomotive and Rolling Stock Corp Ltd (CSR) , the country's biggest train maker, has won bids for projects worth a total 7.16 billion yuan ($1.1 billion).

CSR's shares in Shanghai rose nearly 4 percent.

Gold-related stocks weighed on broader market gains, however, after the sharpest one-day percentage drop in gold prices since Decemmber 2008.

Shandong Gold and Zhongjin Gold were the top drags on the Shanghai benchmark, losing 1.3 and 0.5 percent, respectively. ($1 = 7.796 Hong Kong Dollars) (Editing by Kim Coghill)

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