HK shares add 2.1 pct; China stocks edge up to 1-yr high

Financials, properties lead gains in Hong Kong

* Stocks in China lag on government investigation news

* Sinopec underperforms after parent's deal to buy Addax (Updates to close)

By Parvathy Ullatil & Claire Zhang

HONG KONG/SHANGHAI, June 25 (Reuters) - Hong Kong shares rose 2.1 percent on Thursday as investors continued to cover short positions on financial counters, while property stocks surged after the U.S. Federal Reserve stuck to its script of keeping borrowing costs low.

Top developer Sun Hung Kai Properties (0016.HK) rose 5 percent to HK$96.75. Sun Hung Kai raised prices for flats at its project in the new territories by 8 percent amid a strong market response, the Oriental Daily reported, citing the company's executive director, Victor Lui Ting.

Property conglomerate New World Development (0017.HK) gained 7.6 percent, while Henderson Land (0012.HK) advanced 6.2 percent.

Stocks in China, which edged up 0.1 percent to finish at a one-year high, were weighed upon by news of the government checking new lending to the stock market.

SINOPEC LAGS AFTER DEAR DEAL

Sinopec Corp (0386.HK) underperformed, inching up 0.4 percent, as analysts deemed its parent's deal to buy Swiss oil explorer Addax Petroleum Corp (AXC.TO) for $7.24 billion, expensive and said it lowered the possibility of an asset injection into the listed company. [ID:nBNG477261]

"China, at the state level, is moving to secure overseas oil assets and is willing to overpay to do so, but will the listed entity be exposed to the aggressive policy or pay a market-based value for those assets?" said CLSA analyst David Hewitt.

The offer price of C$52.80 per share was close to the highs scaled by the stock in June 2008 when crude oil was marching towards $150 per barrel.

Its mainland-listed shares (600028.SS) rose 0.4 percent to 10.56 yuan in Shanghai.

The benchmark Hang Seng Index .HSI was up 382.88 points at 18,275.03, with shares worth HK$60.2 billion changing hands compared with Wednesday's HK$56.7 billion.

"The Fed's decision to keep rates near zero encouraged investors to cover shorts in interest-rate-sensitive stocks," said Alex Tang, research director with Core Pacific-Yamaichi International. "But the weak turnover suggests investors still believe the market is overvalued."

The China Enterprises Index .HSCE, which represents top locally listed mainland Chinese stocks, climbed 2.2 percent to 10,763.76. link....