* HK, China stocks up on hopes for strong economic data
* Profit-taking expected to cap Hong Kong gains
* Times hits high on Lotte buyout (Updates to close)
By Donny Kwok and Claire Zhang
HONG KONG/SHANGHAI, Oct 20 (Reuters) - China and Hong Kong stocks rose on Tuesday spurred by hopes that economic data due later this week will show strong growth and that China is on track to meet economic growth forecast.
Optimism over corporate earnings and China's economic outlook gave investors the confidence to bet on further gains in local stocks, sending the key index up to a 14-month closing high.
The benchmark Hang Seng Index rose 0.83 percent, or 184.50 points to 22,384.96, the highest level since Aug. 4, 2008, led by property and finance stocks. Turnover rose to HK$74.18 billion ($9.6 billion), from Monday's HK$60.6 billion.
"The underlying tone (for the local market) remained strong on hopes for strong data and was aided by the (weak) dollar, while funds flowing to laggards helped boost property stocks," said Conita Hung, head of equity research at Delta Asia Financial. "However, a possible rebound in the dollar after the recent weakness could hurt the market."
Brokers said investors locking in profit could cap the upside for Hong Kong stocks, with strong resistance seen at 22,500 points.
The China Enterprises Index of top locally listed mainland Chinese stocks was up 0.71 percent at 13,039.96, its highest close since June 6, 2008, led by a 5.98 percent gain in mainland property developer R&F Properties.
China's gross domestic product likely expanded 8.9 percent from a year earlier in the third quarter, a Reuters poll showed. GDP and other key economic data are due for release on Thursday.
Chinese supermarket operator Times, which opened 17.7 percent higher at a record HK$5.46, ended at HK$5.30, still up 14.2 percent from its previous close. Times said South Korea's No.2 retailer Lotte Shopping would make a general offer of about $628 million at a price representing a 20 percent premium to its last trading price.
Consumer goods exporter Li & Fung lost 1.2 percent to HK$34.25. It said it would pay up to $402 million to buy a U.S. young men's and children's apparel business, aiming to expand through acquisitions.
A Morgan Stanley research note on Tuesday said it had maintained an "overweight" rating and raised its target price on Li & Fung to HK$38.50 from HK$30 to factor in potential profit from the new deal.
Hang Lung <0101.HK> rose 3.6 percent to HK$30.20 after the developer said it aimed to invest HK$4 billion-HK$5 billion in new commercial property projects in China by 2010.
Bank of East Asia fell 1.7 percent to HK$29.05 after the lender said it was considering raising capital, but had not yet made a final decision.
SHANGHAI UP IN ACTIVE TURNOVER
China's key stock index rose 1.52 percent to a two-month closing high in active turnover on Tuesday, led by financial shares on expectations that data due for release on Thursday would show strong economic growth.
The Shanghai Composite Index ended at 3,084.454 points, near its intraday peak of 3,084.944.
On Monday, the index broke above both a key psychological barrier at 3,000 points and the 60-day moving average, a closely watched chart point now at 3,034 that had not been breached in two months.
Gaining Shanghai A shares outnumbered losers by 717 to 156, while turnover climbed to one-month high of 167 billion yuan ($24.46 billion) from Monday's 140 billion yuan.
China's economy was growing faster with every month and its overall recovery was improving, Vice-Premier Li Keqiang said on Tuesday.
"Investors were optimistic about upcoming key economic data," said Chen Shaodan, senior analyst at Stockfly Securities in Beijing. "The index has formed an uptrend but it may consolidate over uncertain factors, since we have yet to see how strong the data released on Thursday will be," she said.
The official Shanghai Securities News reported that a recent series of positive economic data had led many economists and analysts to expect that China's gross domestic product grew more than 9 percent in the third quarter from a year earlier.
Despite signs of strong growth, Morgan Stanley said in a recent note that China's basic monetary policy was expected to remain stable until the end of this year and that there was no need to worry about the possibility of inflation next year.
"The market was not just cheered by expectations of economic recovery -- the recovery is a fact. Improved third-quarter earnings at listed companies are also boosting confidence," said Chen Jinren, senior analyst at Huatai Securities in Nanjing.
China Merchants Bank gained 4.69 percent to 16.73 yuan after its shareholders approved an additional share offer to raise up to 22 billion yuan to boost its capital adequacy ratio.
PetroChina, the most heavily weighted stock in the index, climbed 1.47 percent to 13.80 yuan as U.S. crude oil futures rose more than half a percent on Tuesday to a one-year high of $80.05 per barrel.
Liquor makers were strong, with Wuliangye Yibin, one of China's top liquor makers, up 8.42 percent at 23.83 yuan after saying earlier this week that its nine-month net profit rose 45 percent to 2.3 billion yuan and estimating that net profit could reach 2.7 billion yuan for 2009. (Editing by Chris Lewis)