* HSI -0.5 pct, H-shares -0.1 pct, CSI300 +0.6 pct
* Sept new loans 857.2 bln yuan and M2 up 12.9 pct yr/yr
* Investors expect further support and reform policies
* Hong Kong falls on weaker overseas markets
By Chen Yixin and Brenda Goh
SHANGHAI, Oct 16 (Reuters) - China shares gained on Thursday after recovering from early morning falls despite weaker markets overseas, with analysts citing better-than-expected money supply and lending data, as well as expectations of more support policies to come.
The Shanghai Composite Index rose 0.6 percent to 2,387.02 points by midday. The CSI300 of the leading Shanghai and Shenzhen A-share listings also gained 0.6 percent.
Du Changchun, Shanghai-based analyst at Northeast Securities, said China's stock market tended to track the overseas market in the first hour of trading, before adjusting to reflect domestic factors.
"The better-than-expected credit data, which could ease the liquidity pressure, thus lifted the index to some extent," Du said.
China shares' performance defied the general downward trend seen elsewhere in Asia, as stock markets in Japan and South Korea were hit by worries over slowing global growth following a slew of weak data from the U.S.
Analysts said that investors still expect the government to release more industrial support policies and reform measures, which also supported the index's gains.
Chinese banks made 857.2 billion yuan ($140 billion) worth of new loans in September, higher than the forecast of 730 to 735 billion yuan, while the broad M2 money supply rose 12.9 percent from a year earliear in line with expectations, data showed on Thursday.
Railway companies CSR Corporation Limited and China CNR Corporation Limited jumped to their 10 percent daily limit after China's Premier Li Keqiang signed high-speed railway agreements with Russia this week.
Drugmakers were also among the biggest gainers, with Shandong Lukang Pharmaceutical Co and Jiangsu Sihuan Bioengineering also hitting the 10 percent daily limit, as investors speculated that these companies could benefit from positive sentiment toward the sector arising from the Chinese government's efforts to combat the Ebola virus.
Hong Kong-listed Chinese drugmaker Sihuan Pharmaceutical Holdings Group Ltd, which works closely with the military, has sent thousands of doses of an experimental Ebola drug to Africa and is planning clinical trials there to combat a deadly outbreak of the disease, executives at the firm told Reuters on Thursday.
Its shares gained 3.7 percent to HK$6.45.
Otherwise, Hong Kong shares were down on Thursday, dragged down by the weaker overseas markets, but the positive performances on the mainland markets limited a further slide in the Hang Seng index.
The Hang Seng Index dropped 0.5 percent to 23,015.94 points, while the China Enterprises Index of the top Chinese listings in Hong Kong fell 0.1 percent.
Some analysts pro-democracy protests, now in their third week, would drive Hong Kong shares any further down, and also saw support emerging from the approaching launch date of the Shanghai-Hong Kong stock connector.
"The U.S. market had a huge drop last night which dragged down the index," said Ying Hao, an analyst at Yuanta Securities in Shanghai. "But the launch date of the stock pilot program may be announced tomorrow, which gives the market a boost."
Top losers include Yunbo Digital Synergy Group Ltd which plunged 12.1 percent, and sportswear Anta dropped 10.7 percent. (Additional reporting by Chen Yixin and Shanghai Newroom; Editing by Simon cameron-Moore)