* SSEC +0.8 pct, CSI300 +1.1 pct, HSI +0.3 pct

* Non-cyclical stocks rally on pension funds hopes

SHANGHAI, Feb 20 (Reuters) - China shares rebounded on Monday, led by wine makers and banks, after media reports said pension funds may begin flowing into the country's stock markets as early as this week.

The bullish sentiment spread to Hong Kong, where the market also advanced but by a more modest margin.

China's CSI300 index rose 1.1 percent to 3,457.94 points by the end of the morning session, while the Shanghai Composite Index gained 0.8 percent to 3,227.33, recouping losses on Friday.

Blue chips were on pace for their best single-day performance since Nov. 11, if the gains could be sustained.

Media reported on Friday China had started investing an initial 360 billion yuan ($52.42 billion) in pension insurance funds from seven provinces and cities in financial markets.

The first tranche of that investment was expected to flow into the stock market as early as this week, state media reported on Monday.

Cao Xuefeng, head of research at Huaxi Securities in Chengdu, said non-cyclical stocks such as pharmaceuticals and wine makers would benefit most from the pension fund investment, as "insurance firms prefer stocks with stable returns."

He also said regulatory moves to restrict "excessive" and frequent" fundraising by some listed companies on late Friday would help contain speculation and boost optimism toward blue-chips.

Sectors gained ground across the board in the mainland market.

Wine makers were popular bets, with an index tracking the liquor sector rallied 3.6 percent at midday, as the industry has been gradually recovering from President Xi Jinping's graft clampdown and the plasticizer scandal since 2012.

Shanghai Bailian Group Co Ltd jumped 10 percent, the maximum allowed, to a 13-1/2-month high, on news of a tie-up with Alibaba Group Holding Ltd.

In Hong Kong, the benchmark Hang Seng index added 0.3 percent to 24,111.85, while Hong Kong China Enterprises Index gained 0.8 percent to 10,439.67.

Southbound flows through the Shanghai-Hong Kong Stock Connect recovered slightly on Monday after accounting for a mere 2.2 percent of Friday's daily quota, down sharply from an average of 24 percent in the previous five sessions.

Most sectors gained ground in the city, but property sector shed 0.1 percent ahead of a busy week for U.S. Federal Reserve speakers.

Market expectation of a U.S. interest rate hike in March are curbing the demand for real estate stocks as the city's borrowing costs closely track that of the United States due to a currency peg to the greenback.