Hong Kong shares rebound, China suffers worst week in 11 months

* HSI gains 0.7 pct on day, 0.5 pct on the week

* CSI300 inches up 0.1 pct, but down 5 pct this week

* Henderson Land up 2.1 pct, now up 40 pct in 2012

* Li & Fung falls after new Wal-Mart deal

By Clement Tan

HONG KONG, Sept 21 (Reuters) - Gains on Friday helped Hong Kong shares achieve a third-straight weekly rise, lifted by commodities-related sectors, with appetites for risk increasing gingerly after oil prices steadied at the end of a volatile week.

Mainland Chinese markets inched higher on the day, but suffered their biggest weekly losses in 11 months. Investors unwound gains from a stimulus-led rally of the past two weeks on reduced hopes that Beijing will further ease monetary policy and a territorial spat between China and Japan.

The Shanghai Composite Index and CSI300 Index each were up 0.1 percent on Friday, but dived 4.6 and 5 percent respectively this week -- their biggest weekly losses since October.

Gains in Shanghai came in bourse volumes that slipped more than 10 percent from Thursday to the third lowest in the last 11 sessions.

The China Enterprises Index of the top Chinese listings in Hong Kong, also known as the H-share index, climbed 1 percent on Friday, but was down 0.3 percent for the week, extending its outperformance compared with onshore markets.

The Hang Seng Index closed up 0.7 percent on the day and 0.5 percent on the week at 20,734.9. Gains in Hong Kong on Friday came in the lowest turnover in more than a week.

Turnover spiked three weeks ago when China first announced infrastructure project approvals that investors saw as fiscal stimulus, but since then, it has steadily declined despite monetary easing by Japan, Europe and the United States.

"Funds were sitting on a lot of cash before this whole string of stimulus action, which was why there was a big rush to reposition," said Daniel So, an equity strategist with Sun Hung Kai Financial.

"But I don't expect this turnover improvement to persist beyond the end of this quarter because of the uncertainty with the political handover in China that is coming up," he added.

The Hong Kong property sector was a clear outperformer on Friday. In an environment flush with liquidity due to all the monetary easing, some investors saw enhanced value in sectors backed by real assets.

Henderson Land rose 2.1 percent on Friday to close at its highest since April 2011. It is now up 40.3 percent this year, compared to the 12.5 percent gain for the Hang Seng Index.

Chinese oil majors rebounded slightly as oil prices appeared set to gain for the second-straight day, paring steep losses on the week. CNOOC gained 0.6 percent, clawing back a bit of Thursday's 3.5 percent tumble.

Chinese gold miners were also stronger, with top sector player Zijin Mining up 2 percent in Hong Kong and 3.5 percent in Shanghai.

FTSE CHINA INDICES REBALANCE

The Chinese banking sector limited gains in mainland Chinese markets after the state-run China Securities Journal newspaper reported commercial banks may reduce dividend payouts to improve profitability and strengthen their balance sheets.

In Shanghai, Industrial and Commercial Bank of China (ICBC) slipped 0.5 percent and Agricultural Bank of China (AgBank) shed 0.8 percent.

Li & Fung fell 2.6 percent after it outlined late on Thursday a new sourcing agreement between its unit, Direct Sourcing Group Pte Ltd, and Wal-Mart Stores Inc that supersedes the buying deals made in January 2010.

Shanghai-listed Poly Real Estate, which after Friday's close is replacing Shenzhen-listed Suning Appliance as a component on the FTSE China A50 Index, rose 3 percent. Suning slumped 6.2 percent.

China Overseas Land & Investment slipped 0.7 percent while Air China rose 3.6 percent. The property company is replacing the airline as a component on the FTSE China 25 Index after Friday.

FTSE China 25 is the underlying index for a popular iShares exchange traded fund in the U.S., in which $4.3 billion was invested as of Aug. 31. (Editing by Richard Borsuk)