(Updates to midday)
HONG KONG/SHANGHAI, June 18 (Reuters) - Hong Kong shares extended their fall into a fourth consecutive session, weighed down by concern over ratings downgrades at U.S. banks and the spread of H1N1 influenza, while Shanghai stocks remained firm on optimism about China's economic recovery.
Late on Wednesday, the Hong Kong government announced that a nurse was the latest confirmed case of the H1N1 virus in the city.
Under worst-case contingency plans released by the mainland health ministry, the Chinese government said it might restrict movements in residential areas and shut down entertainment centres to prevent the virus from spreading.
Mainland financial stocks were backed by a favourable sector outlook given the continued strength of China's economic recovery and ample liquidity in the banking system, although CIMB analyst Alexander Lee warned that Chinese banks may not be able to sustain high liquidity without negative consequences.
Here are the index movers by midday:
HONG KONG
* The benchmark Hang Seng Index fell 356.52 points or 1.97 percent to 17,728.08.
* "Banks and property stocks are the leading losers of the day," said Steve Cheng, associate director at Shenyin Wanguo in Hong Kong. "We see profit-taking in these sectors, even though banks in the mainland market were firm. We didn't follow their trend."
* The China Enterprises Index of top mainland companies fell 2.6 percent to 10,421.18.
* Turnover thinned to HK$36.7 billion from midday Wednesday's HK$40.4 billion.
* Top banks extended their losses, with ICBC sliding 3.6 percent and Bank of China retreating 3.1 percent. HSBC lost more than 1 percent and China Construction Bank dropped 2.6 percent.
* The property sub-index dropped 1.93 percent.
* Chaoda Modern Agriculture tumbled as much as 17.6 percent to a low of HK$4.41, before ending the morning session at HK$4.48, cutting its losses to 16.3 percent.
The Chinese agricultural products maker and distributor on Thursday said it planned to sell up to $228 million shares at a discount. It said it would sell up to 388 million shares, or 12.8 percent of its enlarged share capital, to professional and institutional investors at HK$4.60 each, to raise HK$1.78 billion ($228 million). http://www.hkexnews.hk/listedco/listconews/sehk/20090618/LTN20090618012.pdf
Trading in the stock, which was suspended on Wednesday afternoon, resumed on Thursday.
* Jiangxi Copper slipped 1.6 percent, dragged by the market's decline, even after the company on Wednesday said repair work for its Guixi smelter, which has an annual production capacity of 900,000 tonnes of copper cathode, had been completed.
Full statement on http://www.hkexnews.hk/listedco/listconews/ sehk/20090617/LTN20090617353.pdf
* Sinotrans Ltd fell further, extending its loss to 1.7 percent from 0.6 percent in early trade after saying it would set up a 15 percent owned joint venture with its parent company and other partners, with a registered capital of 500 million yuan ($73.13 million), for the provision of financial services and finance consultancy services, and credit verification to companies of its parent. For statement click http://www.hkexnews.hk/listedco/listconews/sehk/20090618/LTN20090618019.pdf
*China Mobile lost 1.8 percent on the company's move to take up a 12 percent stake in Taiwan's third-largest mobile operator Far EasTone for $540 million.
SHANGHAI
* The Shanghai Composite Index ended the morning up 0.92 percent at 2,836.074 after hitting an 11-month intraday high, as optimism grew over prospects for economic recovery and concerns eased about the likely impact of an imminent restart of IPOs.
* Gaining Shanghai A shares edged out losers by 454 to 440, while turnover in Shanghai A shares surged to 79.2 billion yuan ($11.6 billion) from Wednesday morning's 52.5 billion yuan.
* Sentiment was boosted by the World Bank's Thursday announcement that it raised its forecast for China's gross domestic product growth this year to 7.2 percent from a March projection of 6.5 percent.
* Analysts said investors appeared to have shrugged off concerns over the resumption of initial public offerings expected by the end of this month, saying the market now believed the first IPOs to emerge would not be large issues from major companies.
* Financial shares were strong, with China Construction Bank rising 5.56 percent to 5.89 yuan.
* "Banking stock valuations are attractive, while earnings are expected to be strong. The index has the potential to rise," said Xiangcai Securities analyst Wu Nan.
* Property shares remained firm after soaring on Wednesday on signs of strong sales, with China Vanke edging up 0.42 percent to 11.93 yuan after jumping 9.7 percent the previous day.
* Coal shares outperformed, with Pingdingshan Tianan Coal Mining jumping 7.65 percent to 36.85 yuan after announcing a bonus share plan, while China Shenhua Energy climbed 3.42 percent to 27.51 yuan.
($1=6.833 Yuan) (Reporting by Nerilyn Tenorio in HONG KONG and Claire Zhang in SHANGHAI; Editing by Chris Lewis)