* HSI +0.2 pct, H-shares +0.5 pct, CSI300 +0.1 pct
* China property weaker due to correction from recent gains
* Cheung Kong at 6-year high helped by drop in U.S. bond yields
* HK, China shut on Monday for Dragon Boat Festival (Updates to midday)
By Grace Li
HONG KONG, May 30 (Reuters) - Hong Kong shares are set to end their best month this year on Friday, underpinned by strength in property developers and Chinese banks.
China shares reversed earlier losses in late morning trade, even as the property sector remained a drag.
Hong Kong and mainland benchmark indexes are still down on the year, with markets awaiting China’s official manufacturing purchasing managers’ index for May due on Sunday, which is likely to have inched up to 50.6 in May from April’s 50.4, according to a Reuters poll.
“Hong Kong market is still very cautious, trading on good news that Wall Street still broke the record. However, A-shares are not moving, holding back the Hong Kong market,” said Jackson Wong, vice-president of Tanrich Securities, adding that investors tend to take profits before the holiday.
Both Hong Kong and China markets will be closed on Monday for the Dragon Boat Festival.
By midday, the Hang Seng Index rose 0.2 percent to 23,062.25 points, while the China Enterprises Index of the leading offshore Chinese listings in Hong Kong climbed 0.5 percent. They are headed for their best month this year, up 4.2 and 4.7 percent, respectively.
The CSI300 of the largest Shanghai and Shenzhen A-share listings was up 0.1 percent and is set for a flat finish in May, while the Shanghai Composite Index was flat at 2,040.64 points but is so far up 0.7 percent on the month.
Chinese property developers were the big index drags as investors took profits on recent gains. Risesun Real Estate Development lost 2.3 percent in Shenzhen, and Poly Real Estate Group shed 1.0 percent in Shanghai.
In contrast, Hong Kong developers outperformed, with Cheung Kong Holdings up 1.7 percent to its highest since January 2008. Sun Hung Kai Properties also added 0.9 percent.
Analysts say both internal and external factors contributed to the sector’s rally. U.S. bond yields slipped to 11-month lows on Thursday, indicating low interest rate is going to stay for longer than expected. A recent relaxation on housing curbs by the Hong Kong government also shows that the tightening cycle is off its peak.
In the Chinese onshore market, Xinjiang related stocks surged as China vowed to strengthen development in the restive northwestern region. Xinjiang Sayram Modern Agriculture soared 9.9 percent, while Xinjiang Haoyuan Natural Gas jumped 8.2 percent.
Chinese President Xi Jinping said on Thursday that China must strengthen education and work to alleviate poverty in the western region of Xinjiang, as the government works to weed out extremism in a region prone to unrest.
Editing by Jacqueline Wong