(Updates to midday)
* HSI up 1.3 pct, Shanghai Comp climbs 0.7 pct
* Midday Shanghai turnover at more than 4-mth high
* HSBC jumps, tracking banks strength on Wall Street
* Exporters strong after encourage U.S. retail data
By Clement Tan
HONG KONG, March 14 (Reuters) - Hong Kong and China shares rose on Wednesday, bolstered by strength in riskier and growth-sensitive sectors after the U.S. Federal Reserve was seen to have improved its outlook on the world's largest economy.
The Shanghai Composite Index gained 0.7 percent at midday, while the China Enterprises Index of the top mainland listings in Hong Kong rose 1.5 percent.
The Hang Seng Index was up 1.3 percent at 21,613.4, fully retracing the 4.3 percent slide over the first three days last week after Beijing announced its first sub-8 percent annual growth target for the world's second-largest economy.
"It's a confidence game, with the U.S. data and FOMC statement helping. We could see more strength this week with a couple of key blue chip companies announcing earnings tomorrow," said Larry Jiang, chief investment strategist at Guotai Junan International Securities.
Chinese property stocks could come under pressure in the afternoon after Premier Wen Jiabao said housing prices in China are still "far from falling to a reasonable level", warning that letting up on regulation would risk chaos in the housing market.
HSBC Holdings Plc, Europe's largest bank and the Hang Seng Index's biggest stock, rose 4 percent in midday volume, exceeding its 30-day average as it tracked strength in the banking sector on Wall Street after the Fed released results from its latest stress tests on U.S. banks.
The Fed also said on Tuesday the U.S. economy was "expanding moderately" following data that further suggested it was improving, with retail sales recording their largest gain in five months in February despite rising gasoline prices.
This boosted Li & Fung. Shares of the manager of supply chains for retailers, including Wal-Mart Stores Inc and Target Corp, jumped 5.1 percent to a near 10-month high.
At the midday break, ahead of corporate earnings that came in slightly under expectations, Cathay Pacific Airways rose 1.7 percent. Chinese internet giant Tencent Holdings Ltd , expecting to post its earnings later in the day, rose 1.5 percent.
Investors continued to reward companies that posted encouraging earnings. Chinese department store operator Golden Eagle Retail Group Ltd extended gains after reporting on Tuesday impressive same-store growth of 25 percent last year.
It soared 4 percent in good volume to its highest since last October.
Also strong were rare earths suppliers, with China seen unlikely to back down after the United States, Europe and Japan joined forces to challenge its restrictions on exports of rare-earth metals, escalating a trade row over access to some of the most important raw materials used in advanced technologies.
Jiangsu-based China Rare Earth Holdings Ltd jumped 13 percent in midday volume, more than five times its 30-day average, to hit its highest since July last year.
In Shanghai, Inner Mongolia Baotou Rare-Earth (Group) Co Ltd rose 3.2 percent, with turnover in the broader Shanghai market hitting its highest at midday since Nov. 3.
Strength in the sector also cheered other growth-sensitive metal stocks. Inner Mongolia Baotou Steel Union Co Ltd jumped the maximum 10 percent in Shanghai, while Angang Steel gained 5.6 percent in Hong Kong. (Editing by Paul Tait)