* SSEC flat, CSI300 0.1 pct, HSI 0.8 pct
* China likely to use more fiscal, rather than monetary measures
* Banking shares firm despite Moody's warning on "systemic risks"
SHANGHAI, Aug 30 (Reuters) - China banking shares rebounded on Tuesday, shaking off generally weak earnings reports and concerns about bad loans, but selling in transportation stocks left major indexes little changed.
China's markets have struggled to make headway amid growing perceptions that the central bank is in no hurry to ease policy soon, for fear of adding to already high debt levels and stoking asset bubbles.
Policymakers have shifted their focus to ramping up fiscal spending instead, but shares of firms which stand to benefit most from an infrastructure building spree have been unable to gain much traction, either.
The blue-chip CSI300 index rose 0.1 percent to 3,311.93 points by the lunch break, while the Shanghai Composite Index was unchanged at 3,071.36 points.
Unless China's economic growth is at serious risk of falling below 6.5 percent, policymakers do not see the need to reduce interest rates or bank' reserve requirement ratio (RRR) again, policy advisers told Reuters, citing evidence that companies and banks are hoarding cash, instead of investing in the real economy.
Banking shares rebounded on Tuesday despite generally eroding profit margins and mounting bad loans in the latest earnings reports from the sector. While conditions are weakening, traders said investors were relieved that interim results did not point to a rapid deterioration in asset quality as many had feared.
Investors apparently shrugged off warnings from credit rating agency Moody's Investors Service that China's banking system faces a systemic risk from a significantly increased reliance by small and mid-tier lenders on interbank funding.
Shares of mid-sized lenders China Minsheng Banking and Industrial Bank were firm, after reporting net profit growth of 1.7 percent and 6.1 percent, respectively.
But the transportation sector fell nearly 1 percent, dragged lower by airlines.
China Southern Airlines' Shanghai-listed shares dropped nearly 3 percent, while its Hong Kong-traded stock slumped over 6 percent, after the carrier reported a 11 percent drop in first-half profit.
In Hong Kong, the Hang Seng index added 0.8 percent to 23,003.44 points as traders grew sceptical that the U.S. central bank would raise rates as soon as next month, while the Hong Kong China Enterprises Index gained 0.9 percent to 9,578.20. ($1 = 6.6780 Chinese yuan renminbi)