SHANGHAI, April 18 (Reuters) - China stocks tracked other Asian markets higher on Thursday, as investors assessed U.S. interest rate outlook, with banking shares leading the gains.

Asian stocks crept higher in a mixed session, while the dollar took a breather and bond markets steadied. Oil nursed its sharpest fall in two-and-a-half months on demand worries and the lack, so far, of an obvious Israeli or U.S. response to Iran's weekend attack.

** At the midday break, the Shanghai Composite index was up 0.55% at 3,088.33.

** China's blue-chip CSI300 index was up 0.61%, with its financial sector sub-index rising 1.48%, the consumer staples sector up 1%, the real estate index down 0.05% and the healthcare sub-index up 0.2%.

** Chinese H-shares listed in Hong Kong rose 1.45% to 5,833.02 and the benchmark Hang Seng Index was up 1.34% at 16,469.29.

** However, investors are still wary about geopolitical tensions, as President Joe Biden on Wednesday called for sharply higher U.S. tariffs on Chinese metal products as part of a package of policies aimed at pleasing steelworkers in the swing state of Pennsylvania, at the risk of angering Beijing.

** The smaller Shenzhen index was up 0.81%, the start-up board ChiNext Composite index rose 0.46% and Shanghai's tech-focused STAR50 index gained 0.41%.

** Around the region, MSCI's Asia ex-Japan stock index was up 1.13%, while Japan's Nikkei index rose 0.51%.

** The top gainers in the main Shanghai Composite index were Traffic Control Technology Co Ltd, up 20%, followed by Sinocelltech Group Ltd, gaining 15.12% and Hunan Kylinsec Technology Co Ltd, jumping 13.49%.

** The top gainers among H-shares were Shenzhou International Group Holdings Ltd, up 5.66%, followed by Ping An Insurance Group Co of China Ltd, gaining 4.98% and ANTA Sports Products Ltd, up by 4.96%.

(Reporting by Shanghai Newsroom; Editing by Rashmi Aich)