* China shares recover from weak start; earnings buoy
* China Life, Air China advance after first-half earnings
* Hong Kong turnover slides to six-week low (Updates to close)
By Parvathy Ullatil & Claire Zhang
HONG KONG/SHANGHAI, Aug 26 (Reuters) - China shares rose on Wednesday, after index heavyweights including flagship carrier Air China posted better-than-expected earnings while technical charts pointed to a rebound.
Hong Kong shares were little changed by the close of Wednesday's session, with thin turnover at the lowest in six weeks, even as strong earnings momentum buoyed select shares including China Life.
Uncertainties surrounding how fast China's economy is recovering and when the government will adjust its relatively easy money policy continued to cast a shadow over investment sentiment in both markets.
China continues to face major challenges to its recovery, including weak demand for its exports, the head of the main planning agency was cited as saying on Tuesday. [ID:nLP276239]
EARNINGS PROVIDE BOOST
China Life Insurance Co advanced 3.2 percent after the country's top life insurer, posted a 15.2 percent rise in first-half profit as a booming stock market boosted its returns on investments.
In Shanghai, the stock rose 1.1 percent as analysts cheered the strong growth in the insurer's new business value.
The benchmark Hang Seng Index finished 21.08 points higher at 20,456.32 even as turnover dropped to HK$55.3 billion from around HK$80 billion averaged in the first two weeks of August.
The China Enterprises Index, which represents top locally listed mainland Chinese stocks, was up 0.02 percent at 11,657.13.
"Investors are simply more cautious going into September, especially after the recent big falls in the A-share market. The expectation is that there will be a deeper correction, and the index won't be able to bounce back above 20,000 points as easily as it did this month," said Peter Pak, vice-president with BOCI Research.
Air China, the country's national flag carrier, vaulted 10 percent to 7.92 yuan after saying net profit in the first half jumped 155 percent, helped largely by fuel-hedging gains.
In Hong Kong, the stock was up 3.6 percent.
Property shares were strong in Shanghai. Poly Real Estate Group rose 2.2 percent to 24.69 yuan after saying net profit in the first half rose 35 percent to 1.4 billion yuan.
The official China Securities Journal cited forecasts from industry analysts for steady growth in listed property developers' earnings as property prices rise.
China State Construction Engineering, China's top homebuilder and the biggest listed property developer, climbed 2.6 percent to 5.22 yuan after saying net profit was 2.35 billion yuan for the first half of this year.
Investors also looked ahead to companies that may post strong earnings. Top carmaker SAIC Motor, which will report interim results later in the day, finished up 8.6 percent at 18.65 yuan.
LIQUIDITY WORRIES HOUND
The Shanghai Composite Index was up 1.8 percent at 2,967.595.
"Sluggish trading will limit the index's rebound to only a maximum of 100 points," said Central Securities stock strategist Zhang Gang in Shanghai. Compared with Wednesday's close, that would only be a rise of slightly more than 3 percent.
Gaining Shanghai A shares overwhelmed losers by 827 to 50 on Wednesday, but turnover for Shanghai A shares fell to a relatively thin 143 billion yuan ($21 billion) from Tuesday's 160 billion yuan.
Wednesday's rally came after the index successfully established a double bottom on the charts on Tuesday, when it tumbled in intraday trading but managed to finish above the five-day moving average around 2,900 points.
That set the stage for a technical rebound and would allow the index to head for the next resistance level at the 60-moving average, now around 3,060, in coming weeks, analysts said.
Huatai Securities analyst Chen Huiqin in Nanjing said retail investors rushed into the market to hunt for bargains after the index abruptly tumbled more than 5 percent in intraday trading on Tuesday, which she attributed to a selling spree by funds.
The index pared losses to close 2.6 percent lower on Tuesday, as the market struggles to stabilise following a two-week, 20-percent slide earlier in the month that ended this year's heated 90-percent rally.
Brokers said foreign funds were fleeing China stocks during the slump, helping to push the market lower.
Brokerage China International Capital Corp estimated that proposed rules to limit the inclusion of subordinated bonds in Chinese banks' capital base could cut lending by 700 billion yuan. (Editing by Edmund Klamann and Chris Lewis)