Hong Kong shares test three-month highs, China flat

* HSI up 0.3 pct, CSI300 flat

* Standard Chartered shares at 2 1/2 yr low after Iran allegations

* Macau casinos strong, MGM China jumps 3.1 pct ahead of H1 earnings

* Chinese insurers hit by China Life profit warning

By Clement Tan

HONG KONG, Aug 7 (Reuters) - Hong Kong shares rose on Tuesday, lifted by Macau casino shares, but Standard Chartered Plc suffered its worst daily loss in 2-1/2 years after New York regulators accused it of illegally hiding transactions tied to Iran.

The Hang Seng Index rose 0.3 percent to 20,056.1 points, retreating slightly from three-month intra-day highs but trading in the same 150-point it did on Monday.

Shares of Standard Chartered Plc tumbled 7.4 percent after New York's top bank regulator alleged the bank had hidden $250 billion in transactions tied to Iran and threatened to strip its New York banking license.

Sands China led an outperforming Macau casino sector, buoyed by hopes that revenue growth in August would rebound from July lows.

But further profit warnings and underwhelming corporate earnings from Chinese firms limited gains. A profit warning from China Life Insurance , the largest player in the sector, offset stronger resources plays in mainland markets.

Both the Shanghai Composite Index and the CSI300 Index of the top Shanghai and Shenzhen listings finished flat at midday. The China Enterprises Index of the top Chinese listings in Hong Kong crept up 0.4 percent.

"The Macau casino sector tends to trade very volatile on news flows because it's quite difficult to look beyond the short to medium term," said Edward Huang, an equity strategist with Haitong International Securities.

Sands China shares had risen 3.8 percent by midday, as the sector extended gains on revenue growth optimism. That came despite weekend raids on casinos and hotels in Macau in which police detained more than 150 people after a recent spate of killings had raised fears of a new gang war in the world's largest gambling destination.

In a note to clients dated Aug. 6, JP Morgan analysts said they are "incrementally more positive from here" on the sector, believing Macau casinos have passed the toughest month in terms of year-on-year growth comparison.

MGM China rose 3.1 percent ahead of its interim earnings later in the day. It is up more than 11 percent this year to date and is currently trading at 9.3 times forward 12-month earnings, according to Thomson Reuters StarMine.

Esprit Holdings jumped 8.1 percent before the company announced the appointment of a new chief executive officer at the midday trading break.

CHINA INSURERS WEAK, OFFSET RESOURCES STRENGTH

China Life Insurance shares slipped 1.6 percent in Hong Kong and 1.7 percent in Shanghai after it warned of a loss in first half profit due to lower investment yields and higher impairment losses from a still-depressed capital market.

It also said it did not expect the annual profit decline to exceed the 29.4 percent slump in the first quarter.

Its rival, Ping An Insurance , lost 0.5 percent in Hong Kong and 1.7 percent in Shanghai.

Weakness in the Chinese insurance sector offset strength in the Chinese resources sector after the Ministry of Industry and Information Technology (MIIT) imposed new minimum capacity requirements on rare-earth smelting companies.

Shares of larger players, seen benefitting from the move to consolidate the rare-earths sector, jumped. Inner Mongolia Baotou Steel Union rose 3.3 percent to the highest level since mid-June.