HONG KONG, April 7 (Reuters) - Hong Kong shares finished flat on Thursday, with profit-taking in overbought blue-chip stocks offset by institutional buying in some stocks that have lagged the three-week rally, suggesting that persistent demand will lead to more gains.
The Hang Seng Index has gained for the past six consecutive sessions and turnover has been picking up, signaling that investors who had been sidelined by March's volatility are heading back hungry for bargains.
The main closed down 0.01 percent at 24,281.8, after touching a three-month high in Wednesday's session. It had posted gains for the previous five sessions, the longest winning streak since November 2010.
The China Composite Index ended down 0.07 percent at 13,647.79. The Shanghai Composite Index hit its highest level this year on Thursday, closing up 0.22 percent at 3,007.91.
HIGHLIGHTS:
* The Hang Seng Index has finished the last three sessions above a resistance level that connects its previous peaks in October 2007, November 2010 and January this year. Volume on Wednesday was the second-highest since March 11, when the earthquake struck Japan.
* Among the biggest drags on the index on Thursday, PetroChina Co Ltd , down 0.7 percent, had a relative strength index (RSI) value of 86 at the start of trading on Thursday. Cheung Kong (Holdings) Ltd , down 2.2 percent, and Industrial and Commercial Bank of China Ltd , down 0.8 percent, both had RSI values of 81.
* Analysts said there was some rotational buying as investors placed orders for laggards in sectors that were not seen to be directly linked to anticipated Japan post-quake reconstruction. Funds were mainly chasing HSBC Holdings Plc up 1.5 percent on the day but seen lagging the three-week rally on the benchmark.
* Chinese oil giants, CNOOC Ltd and China Petroleum & Chemical Corp (Sinopec) both gained 1.5 after Beijing announced it would raise gasoline and diesel prices to record highs late on Wednesday. [ID:nH9E7ES01M] Analysts said CNOOC, an upstream oil company, could strengthen further, while expecting downstream peer PetroChina to further weaken, but any price movements would probably be in line with petroleum prices.
* Chinese carmaker BYD Co Ltd , backed by U.S. billionaire Warren Buffett, climbed 6.2 percent in the morning to a session high of HK$30.65 before easing to a 5.4 percent gain after it reported higher March sales from February. Analysts remained cautious, saying the company was struggling to recover. [ID:nL3E7F70HD]
DAY AHEAD:
* Analysts expect profit-taking on overbought blue chips to continue on Friday. (Reporting by Clement Tan; Editing by Chris Lewis)