HK shares rise after two-day drop but turnover slows

Turnover stays low amid swine flu caution

* Li & Fung soars on strong outlook

* Airlines, shippers partially recover from 2-day sell-off (Updates to midday)

By Parvathy Ullatil

HONG KONG, April 29 (Reuters) - Hong Kong shares rebounded from their two-day sell-off on Wednesday, rising 1.8 percent by midday, but turnover on the exchange slowed as worries about a potential widespread swine flu outbreak kept investors at bay.

Turnover dropped to HK$25.8 billion ($3.3 billion) from HK$30.7 billion by midday Tuesday.

"The sentiment is not that of panic but that of caution. There is no indication on how bad the situation may get, so investors are guarded about taking new positions," said Alex Wong, director with Ample Finance Group.

More countries have reported cases of the flu and others such as Australia and South Korea are testing for the virus. The World Health Organisation raised its alert level to a step closer to declaring the first flu pandemic in 40 years.

"Though Hong Kong has the SARS experience behind it, there are fears that this swine flu may be different and could potentially do more damage" he said. link...