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* SSEC +0.8 pct, CSI300 +1.0 pct, HSI +0.6 pct
* MSCI inclusion strengthens blue-chips' upward momentum
* Shares of a Wanda Group unit tumble, trading suspended
SHANGHAI, June 22 (Reuters) - Excitement over China's MSCI's inclusion continued to spur Chinese equities on Thursday, with banking shares taking the baton from consumer players in driving the blue-chip CSI300 index to the highest level in 1-1/2 years.
The euphoria overwhelmed any worries about Chinese conglomerate Dalian Wanda Group. Investors dumped shares of one listed unit and bonds of another, unlisted one amid speculation about the group.
The group denied as "malicious speculation" rumours that banks had ordered sale of its bonds, and said it was operating normally.
The blue-chip CSI300 index rose 1.0 percent, to 3,624.95 points by the lunch break, a level not seen since January 4, 2016. The Shanghai Composite Index gained 0.8 percent, to 3,180.10 points.
Investors continued to pile into stocks that will potentially benefit from inclusion in the MSCI Emerging Markets Index (EMI).
The U.S. index provider said on Tuesday it would add 222 China-listed stocks to its Emerging Markets Index (EMI), tracked by around $1.6 trillion, with the inclusion process starting June 2018.
The MSCI inclusion "paves the way for global capital inflows into China's A-shares," rating agency Moody's said in a report on Wednesday, projecting roughly $11 billion in near-term fund inflows into mainland stocks from funds benchmarked to EMI.
Hong Hao, head of research at BOCOM International, said that the inclusion "bodes well for large-cap blue chips", and enhances investor preference for these stocks amid a slowing Chinese economy.
The CSI300 Banking subindex jumped nearly 3 percent, as the consumer sector took a breather after the previous sessions surge. The sectors would represent the biggest weightings of China stocks in the MSCI EMI.
Interest in blue-chips sapped demand for small-caps, which has already waned sharply. The start-up board ChiNext was roughly flat.
Wanda Film Holding, a listed arm of Wanda Group, slumped roughly 10 percent a five-week low, before trading was suspended by the Shenzhen Stock Exchange.
Investors also sold bonds issued by Dalian Wanda Commercial Properties, another Wanda unit.
Hong Kong shares followed Asian markets higher.
The Hang Seng index added 0.6 percent, to 25,839.29 points, while the Hong Kong China Enterprises Index gained 1.1 percent, to 10,504.11.
Most sectors rose, but energy shares dipped as oil prices hit a 10-month low overnight on concerns over a supply glut and falling demand.
Reporting by Samuel Shen and John Ruwitch; Editing by Richard Borsuk