* CSI300 -0.2 pct; SSEC -1.2 pct; HSI +0.6 pct
* Market gives muted reaction to fresh supportive policies
* 12 China-listed firms say top managers, shareholders buy shares
SHANGHAI, July 2 (Reuters) - China stocks had another highly volatile session by midday on Thursday despite fresh government measures aimed at putting a floor under the market's recent sell-off.
Hong Kong's benchmark Hang Seng index rose, a day after markets were closed for a holiday, taking cues from global equity markets.
Late on Wednesday, China's securities regulator relaxed rules on using borrowed money to speculate on stock markets, letting brokerages set their own tolerance level on margin calls, and allowing the roll-over of margin lending contracts.
In addition, China's two major stock exchanges in Shanghai and Shenzhen said they would cut transaction fees effective Aug. 1.
Investors gave a muted response to the announcements - with the same kind of apathy toward a raft of other measures unveiled over the past few days - with major indexes heading south immediately after the opening, although they recovered much of their losses by midday.
By the end of morning trade, the CSI300 index fell 0.2 percent, to 4,244.55 points, while the Shanghai Composite Index lost 1.2 percent, to 4,003.54 points.
Despite continued market sluggishness, relaxing rules on margin trade can at least stem further panic selling in the short term, said Hong Hao, chief strategist with BOCOM International.
"I think this is the right dose of medicine," Hong said.
"The recent slump was largely driven by margin calls, so if brokerages don't force liquidation the market slide should be stemmed, at least for now."
However, he noted that small cap stocks still had room to fall as they were still expensive.
Wang Jun, fund manager at Bosera Asset Management Co, expected more government policies ahead to support the stock market, saying "it's unwise to dump shares now."
Shenzhen's growth board ChiNext lost 1 percent, while the transport index slumped more than 4 percent, although market sentiment was anchored by strong performance of banking heavyweights.
The market also got some comfort from a dozen listed companies who said on Thursday their major shareholders or top managers had recently increased holdings in the companies.
Shares of those companies, including Zhejiang CONBA Pharmaceutical Co Ltd, hotel operator Lawton Development Co Ltd, Suzhou Gold Mantis Construction Decoration Co Ltd and power meter maker Ningbo Sanxing Electric Co Ltd jumped.
And shares of consumer electronics maker TCL Corp surged 7.3 percent, after the company announced a share buyback scheme to "stabilise investor expectations" and "protect shareholder interest".
In Hong Kong, the Hang Seng index added 0.6 percent, to 26,397.09 points, but the Hong Kong China Enterprises Index lost 0.7 percent, to 12,892.92.
The Hong Kong stock exchange said on Thursday that nine companies, including Zijin Mining and Sun Hung Kai had repurchase their ordinary shares in the market.
Reporting by Samuel Shen and Pete Sweeney; Editing by Jacqueline Wong