* HSI +0.2 pct, H-shares +0.7 pct, CSI300 +0.8 pct
* China aerospace sector soars on hopes for more state spending
* Galaxy Entertainment at to 2-month high after chairman’s comment
* Hong Kong closed on Tuesday for a public holiday (Updates to midday)
By Grace Li
HONG KONG, June 30 (Reuters) - China shares rose early on Monday, lifted by a surging aerospace sector and broadly stronger banks while Hong Kong markets also advanced with Macau casinos leading gains.
At midday, the Hang Seng Index was up 0.2 percent at 23,276.55 points. The China Enterprises Index of the top Chinese listings in Hong Kong gained 0.7 percent.
For the quarter, they were up 5.1 and 3.0 percent, respectively.
The CSI300 of the leading Shanghai and Shenzhen A-share listings rose 0.8 percent, while the Shanghai Composite Index was up 0.7 percent at 2,050.07 points.
Both mainland indexes were holding onto quarterly gains of 1.0 and 0.8 percent, respectively.
“The market sentiment is stabilizing. We didn’t see a cash crunch as we saw this time last year, thanks to the policy of targeted loosening,” said Guo Yanling, senior analyst at Shanghai Securities.
“But the momentum is not enough to lead to an overall rebound, as the strong performance of new initial public offerings will continue to divert funds from existing stocks,” she said.
On Monday, a fourth new mainland listing - Shanghai Lianming Machinery - surged the maximum allowed 44 percent on its trading debut in Shanghai. The three listings which started trading on Thursday in Shenzhen rose 10 percent, the maximum allowed on days after the first one, as they did on Friday.
Guo said the outlook for the A-share market in coming months is brightening, with improved liquidity conditions and expectations for targeted stimulus measures in the second half.
In Shanghai, four aerospace firms soared the maximum allowed 10 percent. Analysts said investors chased defence-related stocks on speculation tensions with neighbouring countries would spur Beijing to spend more on the sector.
Macau gambling firms were again key outperformers on the Hang Seng. Galaxy Entertainment Group climbed 3.9 percent to its highest since April 28, after its founder and chairman Lui Che-Woo said on Friday that China’s slowdown won’t hurt business. Sands China also gained 2 percent.
China Telecom Corp was up 3.0 percent and China Unicom Hong Kong 0.7 percent after they received high-speed 4G mobile network test licences for the FDD-LTE standard in 16 cities late on Friday.
Rival China Mobile dropped 0.5 percent, the largest drag on Hong Kong’s benchmark index.
Tencent Holdings inched up 0.1 percent to a 3-1/2 month high after China’s biggest listed tech firm said it would buy 20 percent of online classifieds company 58.com Inc for $736 million.
Hong Kong will be closed on Tuesday for a holiday. (Editing by Richard Borsuk)