HK shares rise for 3rd day after China rate bonanza

* Shares close off highs on China slowdown worries

* Aggressive rate cuts send Chinese properties soaring

* Air China gains on capital infusion hopes

* Commodities rally on hopes of intact China growth

(Updates to close)

By Parvathy Ullatil

HONG KONG, Nov 27 (Reuters) - Hong Kong shares rose 1.4 percent on Thursday, advancing for a third straight day but closing off highs as investors locked in gains on Chinese stocks after they took the nation's aggressive interest rate reductions as a sign of a sharper-than-expected slowdown.

"The unusually big interest rate cut which was announced ahead of market expectations seems to suggest that China's economic worries are more serious than previously thought," said Patrick Shum, strategist with Karl Thomson Securities.

China's economic growth slowed to 9 percent in the third quarter, falling into single digits for the first time in at least three years.

"There is talk that China's GDP growth will fall below 8 percent in the fourth quarter."

But mainland property counters racked up big gains, with China's higher-than-expected 1.08 percentage point interest rate cut -- its fourth since mid-September and biggest in more than a decade -- coming as a shot in the arm for the ailing sector.

China Overseas Land Investment (0688.HK: Quote, Profile, Research, Stock Buzz) surged 7.5 percent, Guangzhou R&F Properties (2777.HK: Quote, Profile, Research, Stock Buzz) soared 12.2 percent, while China Resources Land (1109.HK: Quote, Profile, Research, Stock Buzz) shot up 5.3 percent.

The benchmark Hang Seng Index .HSI ended 182.61 points higher at 13,552.06.

The index hit a two-week high of close to 14,000 points earlier, partly supported by a fourth day of gains on Wall Street and an overnight rally in commodity prices.

And some analysts expect the global markets to trend higher in coming weeks.

"China's unexpected rate cut and confidence in Obama's new financial team may help the global markets extend their rally, especially if the U.S. can find a solution for its automakers soon after Thanksgiving," said Steven Leung, director with UOB Kay Hian.

Mainboard turnover rose to HK$50.2 billion ($6.4 billion) from HK$41.7 billion on Wednesday.

The China Enterprises Index of top locally listed mainland Chinese firms .HSCE pared gains to 2.7 percent to close at 7,120.83 as bank stocks shed early sharp gains.

Shares in China's top lender, ICBC (1398.HK: Quote, Profile, Research, Stock Buzz), ended up 1.6 percent after China's central bank slashed the reserve requirement at large banks by 1 percentage point. But some analysts said the latest round of interest rate cuts may put further pressure on net interest margins of locally listed Chinese banks.

COMMODITIES RALLY

Metal stocks, which began their sharp ascent on Wednesday on BHP Billiton's scuppered bid for Rio Tinto, extended gains on China's monetary easing.

"With the larger-than-expected interest rate cuts coming sooner than expected it looks like China is determined to preserve its sharp growth rates. This is good news for commodity stocks that have been taking a beating on a projected demand slowdown," said UOB's Leung.

Angang Steel (0347.HK: Quote, Profile, Research, Stock Buzz), advanced 7.3 percent, while the world's most valuable coal miner, China Shenhua Energy (1088.HK: Quote, Profile, Research, Stock Buzz), bulked up 5.3 percent.

Refiner Sinopec Corp (0386.HK: Quote, Profile, Research, Stock Buzz) gained 3.7 percent after the head of China's top economic planning body said on Thursday it would make public the details of its much-awaited fuel price reforms as soon as possible. [ID:nPEK133183]

Asia's biggest oil and gas producer, PetroChina (0857.HK: Quote, Profile, Research, Stock Buzz), which also owns refining operations, jumped 4.2 percent.

Air China (0753.HK: Quote, Profile, Research, Stock Buzz) vaulted 9.4 percent on hopes of state aid after rival airlines said their parent companies had applied for capital injections from the Chinese government amid hedging losses and slower air traffic.

China Southern Airlines (1055.HK: Quote, Profile, Research, Stock Buzz) confirmed on Wednesday its parent was considering infusing 3 billion yuan, secured from the government, into the listed company to boost its capital position. Its stock was suspended from trade.

On Thursday, shares of China Eastern Airlines (0670.HK: Quote, Profile, Research, Stock Buzz) were suspended after it announced a 1.83 billion yuan hedging loss by Oct. 31, as its parent was applying for a capital infusion from the state. (Reporting by Parvathy Ullatil; Editing by Anne Marie Roantree)