(Updates to close)
* Shanghai Comp up 1.3 percent on good volume
* Developers lead charge on mainland, Vanke up 3.9 percent
* Hang Seng holds gains as AIA offsets bank weakness
By Clement Tan and Vikram Subhedar
HONG KONG, Feb 24 (Reuters) - China shares rose on Friday to a fresh three-month high as speculation the state will adopt policies that help developers and a push for construction of low-cost housing in Shanghai spurred a rally in the real estate sector.
The Shanghai Composite, up 1.3 percent, posted its sixth straight weekly gain with a steady pick-up in turnover, suggesting more retail investors were coming off the sidelines, and an improving chart outlook pointing to further gains.
In Hong Kong, the Hang Seng rose 0.1 percent helped largely by the 3.3 percent gain in insurance giant AIA after its strong results.
Chinese developers listed in Hong Kong also rose with related businesses, cement in particular, attracting buyers on the back of gains in mainland markets.
Local media reported that several major Chinese cities were considering easing stiff restrictions on migrant workers, adding to reports earlier this week from official state media about Shanghai doing the same.
Traders also attributed gains in the sector to a document on the official Shanghai government website that outlined targets for social housing including the construction or financing arrangements for 75,000 units of low-cost, non-public rental housing aimed at low-income families.
These developments follow media reports over the past few weeks that have said some smaller Chinese cities have begun easing policy towards developers, although no official statements have been made.
"I think the central government is still quite firm on the property sector," said Larry Jiang, chief investment strategist at Guotai Junan Securities in Hong Kong.
"But a lot of local governments live or die by the property market so they may try and do something. At the moment, it's more about momentum," said Jiang.
The Shanghai property sub-index rose 3.9 percent, the fifth time this year it has risen more than 3 percent as it extended its rebound after sharp losses during the past two years. The index is up nearly 18 percent in 2012.
Poly Real Estate, among the largest developers in the mainland, gained 3.5 percent, while Shenzhen-listed China Vanke rose 3.9 percent.
HONG KONG SNAPS STREAK OF WEEKLY GAINS
While Hong Kong shares eked out a gain on Friday, they snapped a seven-week streak of rises as investors locked in some profits after 2012's strong start and ahead of corporate earnings due over the next month. For the week, the index slipped 0.4 percent.
The Hang Seng is still up 16.1 percent on the year but off the six-month high it hit this week.
The Hang Seng's current forward price-earnings multiple stands at 10.2 times, having expanded from the post-Lehman crisis lows of about 8.7 times last October with investors looking for corporate profits to underpin the rally.
"It's been good revenge for value investors so far this year," said Guotai Junan's Jiang, but he added that earnings reports will be the next big thing for the Hong Kong markets.
On Friday, Chinese banks were a drag on the benchmark after regulatory approval for mid-sized China Minsheng to issue 1.65 million new shares in Hong Kong prompted fears of more capital raising in the sector.
Chinese banks have remained on the backfoot this week after official state media reported sluggish loan growth this month for the country's four biggest state-owned banks.
Shares of ICBC, the world's biggest bank by market value, fell 0.9 percent and were the top drag on the Hang Seng. Smaller rivals China Construction Bank and Bank of China both fell 0.3 percent on Friday. (Editing by Richard Borsuk)