* Hang Seng index lower, banking shares weigh
* Shanghai edges higher, agricultural plays up
* Uncertainty over bank reserve requirement keeps trade light (Updates to midday)
HONG KONG, April 14 (Reuters) - Hong Kong shares were weaker on Thursday morning, while the Shanghai market was little changed as trading volume fell ahead of inflation data and caution over a possible increase in the reserve requirement for Chinese banks.
The Hang Seng Index was down 0.41 percent at 24,036.57 by the midday trading break. The China Enterprises Index was off 0.4 percent.
China was likely to raise bank reserve requirements in the near term to soak up excessive cash in the economy, the official China Securities Journal said in a front page editorial on Thursday. [ID:nL3E7FE03W]
"Volumes are not great and the markets are still digesting the rate rise, but risk appetite has not really waned," said Louis Capital Markets Director Tom Kaan in Hong Kong.
"A lot of investible money in China is still locked in physical real estate," said Kaan, adding that the move to equities had not really taken off but the inflection point was coming.
In a bid to curb property prices, China's central bank has raised bank reserve requirements six times since October 2010, with the latest increase on March 18 taking the reserve requirement ratio to a record 20 percent for the country's big banks.
In addition, the central bank has also raised interest rates four times since October to tame stubbornly high inflation.
Large mainland banks were the biggest drag on the Hang Seng Index, with China Construction Bank Corp , Industrial & Commercial Bank of China Ltd and Bank of China Ltd all down about 1 percent.
Bernstein Research banking analyst Mike Werner in Hong Kong, who favours large banks over mid-sized peers, rated CCB and ICBC as "outperform", with the former as his top pick in the sector.
AGRI PLAYS RISE, PROPERTY WEAK
China's main stock index was little changed by midday as property counters remained weak after Premier Wen Jiabao said in a cabinet meeting that the central government would use all tools at its disposal to stabilise prices, including in the red-hot property market. [ID:nL3E7FD1LJ]
The benchmark Shanghai Composite Index was up 0.09 percent at 3,053.29, after a 1 percent rise on Wednesday, while the property sub-index eased 0.83 percent.
"The government is trying every way to suppress property prices and these shares are under heavy pressure," said Zheshang Securities analyst Zhang Yanbin in Shanghai. "But as valuations remain low, sharp declines are unlikely."
Investors were less keen on making big bets ahead of key economic data expected on Friday. Chinese consumer inflation for March is expected to come in above 5 percent, which may push the government to implement more tightening policies.
Agriculture issues outperformed as higher food prices and increasing export demand from Japan were seen improving earnings, analysts said.
Shandong Oriental Ocean Sci Tech Co Ltd , the biggest gainer on the Shenzhen market, jumped by its 10 percent daily limit, while Gansu Dunhuang Seed Co Ltd rallied 6.1 percent.
Laiwu Steel Corp and Jinan Iron and Steel Co Ltd , among the biggest gainers on the Shanghai market, jumped by the 10 percent daily limit as they proposed a share swap deal to form a combined entity. [ID:nL3E7FD0AD]
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