* CSI300 +0.5; SSEC +0.3; HSI flat
* Real estate stocks up on govt policy support
* China market on track to end the week up about 2 pct
By Samuel Shen and Pete Sweeney
SHANGHAI, March 27 (Reuters) - China stocks rose on Friday morning, led by property shares which rose sharply on expectations of increased support, and bolstered by the government raising limits in its qualified investor scheme.
Energy shares remained strong on continuing tension in the Middle East.
The impact of poor economic data released on Friday - showing profits earned by Chinese industrial firms fell 4.2 percent in January-February - was offset by expectations of fresh money inflows after China waived the $1 billion limit on a foreign fund investment under the Qualified Foreign Institutional Investor (QFII) scheme.
"We have seen some volatility lately, which is natural," said Li Haoshu, Shanghai-based analyst at Chuancai Securities.
"We expect to see the market to go up further, because fresh liquidity continues to flow in," she said, adding that lifting of QFII's investment ceiling would lead to more foreign interest in Chinese stocks.
Li predicted that major indexes would hit this year's peak around July, when China will likely boost share supply.
The Securities Times reported on Friday that China's securities regulator plans to devolve some of its authority over approving initial public offerings (IPOs) to the Shanghai and Shenzhen Stock Exchanges around May, another step towards a U.S.-style "registration" system for IPOs.
The CSI300 index rose 0.5 percent, to 3,970.10 points at the end of the morning session, while the Shanghai Composite Index gained 0.3 percent, to 3,692.99 points.
Both CSI300 and the SSEC are on track to end a volatile week up around 2 percent.
The Hang Seng index was unchanged at 24,501.98 points, while the Hong Kong China Enterprises Index lost 0.1 percent, to 11,906.59.
Most Hong Kong-listed Chinese lenders fell, after China's major state-owned lenders reported lacklustre annual results this week that point to slower profit growth and rising bad loans amid a slowing economy.
Bank of Communications Co Ltd , said on Thursday its bad loan ratio rose to 1.25 percent, its highest level since 2010.
Property stocks on both Hong Kong and mainland markets rose in the morning session, after Beijing on Friday urged local governments to support residents to improve their housing conditions and reduce or even stop land supply in cities where there is a surplus of houses.
The market also expected the government to announce fresh measures soon, including tax cuts and a reduction in mortgage lending rates, to aid the struggling property sector.
In Hong Kong, China Resources Land jumped 3.8 percent, while China Overseas Land & Investment rose 3.9 percent.
On mainland markets, Poly Real Estate rose 2.8 percent while China Merchants Property jumped 4.7 percent.