* HSI + 0.2 pct, H-shares + 0.6 pct, CSI300 flat
* Mainland shares face profit-taking after 5-day rising streak
* China encourages infrastructure firms to invest overseas
* HK strong on hopes of mainland SOE reform
By Chen Yixin and Adam Jourdan
SHANGHAI, Nov 4 (Reuters) - China shares were flat on Tuesday morning after a five-day rally as profit taking capped gains in engineering and machinery companies, which rose after Beijing encouraged infrastructure firms to invest abroad.
The Shanghai Composite Index was flat at 2,430.0 points by the midday break, while the CSI300 of the leading Shanghai and Shenzhen A-share listings remained unmoved.
"The index met with strong profit taking pressures, but I think it could correct in the near team," said Zhang Qi, an analyst at Haitong Securities in Shanghai.
Shares in infrastructure firms were the biggest gainers, with market players pointing to recent moves by Beijing to encourage investment in overseas infrastructure projects, akin to the post-World War Two reconstruction effort or "Marshall Plan" for China.
XCMG Construction Machinery Co Ltd and Shanghai Zhenhua Heavy Industry Co Ltd both hit their 10 percent daily limit.
Mainland shipping shares were also strong after China issued further guidance to support and modernise its shipping industry, saying it would encourage mergers and private investment as well as develop its cruise industry.
China Shipping Haisheng Co Ltd jumped to its 10 percent daily limit while COSCO Shipping Co Ltd gained 3.7 percent.
Mainland financial shares were weak on Tuesday, with China Everbright Bank Co Ltd dropping 2.0 percent and China Minsheng Banking Corp Ltd losing 1.2 percent.
Hong Kong shares finished higher in the morning, underpinned by a positive outlook for reform of China's state-owned firms.
By midday, the Hang Seng Index was up 0.2 percent at 23,959.79 points. The Hang Seng China Enterprises Index of the top Chinese listings in Hong Kong rose 0.6 percent.
Analysts said investors were focusing attention on undervalued Chinese listings rather than specific sectors on the Hong Kong market, which could benefit as confidence rises over Beijing's policies towards future reform of state-owned enterprises (SOE).
"People would rather buy stocks with P/E (price-to-earnings) ratios below 1 than speculating on which sector will get a boost following SOE reform," said Shih Wenbien, stock strategist at Yunta Securities in Shanghai.
Casino shares led morning gains with Galaxy Entertainment climbing 1.4 percent, Sands China Ltd rising 0.7 percent, and Wynn Macau edging up 0.2 percent.
Other gainers included Hong Kong's banking and telecom sectors. Bank of Communications advanced 1.0 percent, China Mobile Ltd rose 1.0 percent and China Unicom Hong Kong Ltd rose 1.2 percent. (Additional reporting by Shanghai Newsroom; Editing by Jacqueline Wong)