* SSEC 0.38%, CSI300 0.26%, HSI -0.4% * Consumer staples firms lead gains, banks drag * Private survey shows China services expansion in May SHANGHAI, June 3 (Reuters) - China shares rose on Thursday at the end of a choppy morning session, with strength in consumer firms outweighing losses in banks as a new survey showed continued expansion in China’s services sector, supported by rising consumption. ** At the midday break, the Shanghai Composite index was up 0.38% at 3,610.90 after trading lower early in the session. ** China’s blue-chip CSI300 index was up 0.26%, shaking off earlier losses. ** The consumer staples sector led gains, rising 1.46%. The sector has alternated between losses and gains this week as investors weigh the impact of Beijing’s announcement that married couples can have up to three children. ** The rise in consumer firms also followed a private sector survey that showed continued expansion in China’s services sector activity in May lifted by a gradual improvement in consumption, although the pace of expansion slowed. ** China’s margin trading balance amount, an indicator of investor sentiment, hit its highest level since July 2015 a day earlier, as investors borrowed more to purchase shares amid a strong stock rally. ** Banks lagged the broader index, with a sub-index tracking the sector down 0.19% on the day. ** In Hong Kong, Chinese H-shares fell 0.33% to 10,916.14, while the Hang Seng Index was down 0.4% at 29,179.93 as global investors weighed ifnlation concerns ahead of U.S. economic data. ** The smaller Shenzhen index was up 0.6%, the start-up board ChiNext Composite index was higher by 0.09% and Shanghai’s tech-focused STAR50 index was up 0.49%. ** The yuan was quoted at 6.3852 per U.S. dollar, 0.06% weaker than the previous close of 6.3815, as regulators continued to make moves interpreted as warnings to speculators betting on a stronger Chinese currency. (Reporting by Andrew Galbraith; editing by Uttaresh.V) Our Standards: The Thomson Reuters Trust Principles.