* China shares up, aided by launch of start-up market * HK stocks gain on abundant liquidity; finance plays lead
* China Construction Bank advances ahead of earnings (Updates to midday)
By Donny Kwok, Claire Zhang and Edmund Klamann
HONG KONG/SHANGHAI, Oct 23 (Reuters) - Hong Kong and China stocks rose on Friday, led by financial shares with abundant liquidity aiding Hong Kong while launch of start-up market lifted Shanghai.
China's key stock index rose 1.84 percent on Friday morning, led by financial and property shares, while small stocks were active, lifted by the imminent launch of the ChiNext start-up market and increasing confidence in the economic recovery.
The Shanghai Composite Index ended the morning at 3,107.565 points, after hitting a two-month high of 3,110.510. It was set for a gain of 4.4 percent for the week.
Gaining Shanghai A shares outnumbered losers by 812 to 119, while turnover rose to 76 billion yuan ($11 billion) from Thursday morning's 64 billion yuan.
Shenzhen-based companies were strong, buoyed by the scheduled launch of ChiNext, China's long-awaited Nasdaq-style second board for start-ups. The board will hold an official launch ceremony on Friday afternoon in Shenzhen, although trade in the first 28 stocks will not begin until Oct. 30.
The first batch of ChiNext-listed companies drew strong investor interest in their initial public share offerings and are expected to reach hefty share valuations in their trading debut.
Merchants Bank rose 4.60 percent to 17.73 yuan, while property sector leader China Vanke advanced 2.19 percent to 12.62 yuan.
The SME Composite Index of the Shenzhen Stock Exchange, which is dominated by shares of small and medium-sized enterprises, rose 1.46 percent to 4,935.299 points, nearing its year high of 5,007.040 set in early August.
Newly listed small shares in Shenzhen were active, with Luolai Home Textile jumping 6.07 percent to 34.05 yuan, while Shenzhen World Union Properties Consultancy rose 3.23 percent to 51.48 yuan.
The official Shanghai Securities News reported that after China's economic growth picked up in the last quarter, as seen in Thursday's strong GDP data, several fund houses expected earnings at listed companies to be upbeat in the fourth quarter.
A Ministry of Commerce researcher also said in remarks published on Friday that China's exports were likely to resume year-on-year growth this quarter as global trade slowly recovers.
"The index is expected to rise as the economic recovery gains strength in the fourth quarter, while ChiNext is also boosting sentiment," said Chen Shaodan, senior analyst at Stockfly Securities in Beijing.
She said perceived pressure on the yuan to appreciate, with one-year offshore non-deliverable forwards earlier this week implying their highest level of future yuan appreciation in 14 months, boosted property and banking shares.
China Construction Bank gained 2.88 percent to 6.07 yuan ahead of its third-quarter earnings report due for release after the market close.
HONGKONG UP IN ABUNDANT LIQUIDITY
Hong Kong stocks rose on Friday with abundant liquidity building investor confidence in further gains by local stocks and aiding by a rebound in finance shares after recent weakness.
The benchmark Hang Seng Index gained 1.47 percent or 327.42 points to 22,537.94 at midday.The China Enterprises Index of top locally listed mainland Chinese companies rose 2.07 percent to 13,228.16.
Turnover increased slightly to HK$40.62 billion ($5.2 billion) from midday Thursday's HK$39.32 billion.
"Players were not rushing to sell ahead of long weekend in a cautiously positive market," said Alfred Chan, a chief dealer at Cheer Pearl Investment. "They were also not rushing to buy when many stocks have already hit highs." China's second-largest lender China Construction Bank rose to HK$7.10, its highest since May 20, 2008, before steadying at HK$7.06 by midday, still up 1.88 percent from its previous close.
ICBC, China's largest lender, rose as much as 2.5 percent to HK$6.49, its highest since Nov 15, 2007, before ending the morning up 2.21 percent
"The market remained buoyant with funds continuing to flow into commodities and stocks, aided by weak long-term sentiment on the U.S. dollar," said Ben Kwong, chief operating officer of KGI Asia, adding that hope of strong earnings fuelled demand for Chinese companies such as banks.
China Life advanced to HK$36.80, its highest since Jan 15, 2008, before steadying at HK$36.75, up 2.94 percent.
Brokers said the key index could test an upside at 22,800 if it could hold above the 22,500 level.
Hong Kong's central bank, the Hong Kong Monetary Authority, has repeatedly injected money to contain an appreciating Hong Kong dollar. It injected HK$3.488 billion ($450 million) into the money market on Friday after putting in a total of HK$8.138 billion on Thursday.
Sinopec rebounded from a more than two-week low, rising 2.98 percent to HK$6.91 at midday. The top Asian refiner is building a new 160,000 barrel-per-day crude distillation unit at an eastern China plant, part of a plan to process more local crude and cut processing costs.
China's leading liquefied natural gas (LNG) developer CNOOC Ltd surged to HK$12.96, its highest since July 15, 2008, before steadying at HK$12.92. (Editing by Chris Lewis)