China and Hong Kong stocks rose on Tuesday morning as investors bet on post-COVID era recovery in the world's second-biggest economy, amid dismal December factory activity data.

** China's CSI300 Index was up 0.2% by the lunch break, while the Shanghai Composite Index gained 0.6%, both reversing early losses.

** Hong Kong's Hang Seng Index, which fell more than 2% earlier in the session, was up 1.3% at the end of the morning trading.

** A private survey showing China's factory activity shrank at a sharper pace in December had dented sentiment early in the session.

** Although rising COVID-19 infections are holding back the economy, "the pace of recovery is expected to accelerate in 2023," the fund unit of Ping An Insurance (Group) Co said in a note on Tuesday.

** "After COVID cases peak, people's life becomes normal, and policy support measures take effect, market sentiment will be repaired and China's A-share market will continue to recover."

** The market was also aided by hopes of some easing in geopolitical tensions, after U.S. Secretary of State Antony Blinken spoke on Sunday with incoming Chinese Foreign Minister Qin Gang, who said he looked forward to maintaining close working ties with Blinken and promoting Sino-U.S. relations.

** In China, tech shares and healthcare stocks posted solid gains, but consumer staple and financial shares fell.

** An index tracking tourism shares fell nearly 2%, following weaker-than-expected tourism data during the three-day New Year holiday.

** Tourism numbers "were not encouraging, suggesting a full recovery from the pandemic shock remains distant", Nomura Chief China Economist Ting Lu wrote.

** He also pointed to "good news": "Following Beijing's abrupt shift to living with COVID in early December, the first wave of massive Covid infections appears to have peaked in some large cities and regions, with visible recoveries in mobility." (Reporting by Shanghai Newsroom Editing by Vinay Dwivedi)