* Gambling stocks lead gainers, financials one too
* Index likely to meet resistance around the 22,00 level
* Encouraging sign as recent gains come amid good volumes
* Gap shrinks between valuations of China and HK markets
HONG KONG, Oct 5 (Reuters) - Hong Kong shares rose nearly 2 percent early Monday, led by financials and Macau gambling stocks, lifted by a wave of short covering and hopes for China policy moves, though gains may be limited around a key level.
For the second consecutive day, casino stocks led market gainers. One broker credited better-than-expected tourist arrivals n Macau during China's Golden Week holidays.
The benchmark Hang Seng Index rose 1.8 percent to 21,890.22 points, its highest since Sept. 22. On a three-day rolling basis, the index has gained 6.5 percent, its biggest rise since mid-July, when Beijing rolled out initiatives to rescue its stock market.
Shares of Galaxy Entertainment rose 5.3 percent, Sands China climbed 5.7 percent while Li & Fung advanced 4.5 percent. Financials took heart from the reduced likelihood of a a U.S. rate increase this year.
"People are covering back their short positions as sentiment has been too bearish earlier, but I wouldn't be very bullish as the overall economic picture remains bad," said Alex Wong, director of Ample Finance Group.
The China Enterprises Index, which tracks Chinese companies listed in Hong Kong, rose 2.5 percent, making for a 10 percent jump the past four days.
Nomura strategists struck a cautionary note about the gambling sector, saying any sharp rallies are an opportunity to lighten positions as Beijing continues to crack down on corruption-related capital outflows.
Traders expect a wave of selling from hedge funds around the 22,000 mark. Since late August, the index has been unable to stay above that for long.
With China markets closed until Oct. 8 for the National Golden Week holidays, the rally in Hong Kong stocks has narrowed the gap between the valuations between the two markets.
The gap between H and A shares of Chinese-listed companies has shrunk to 126, its lowest since Aug. 28, compared to 135 last week, indicating that some institutional money managers were hunting for bargains.
A summer stock market crash and China's surprise currency devaluation in August sent shockwaves through global markets, raising concerns about Beijing's ability to manage its economy.
In an encouraging sign, the rise in the market in recent days has been accompanied by increasing volumes. For example, Friday's turnover was 90 billion Hong Kong dollars ($11.61 billion) was the highest since Sept. 23. ($1 = 7.7498 Hong Kong dollars) (Reporting by Saikat Chatterjee and Teenie Ho; Editing by Richard Borsuk)