Jan 29 (Reuters) - A Hong Kong court on Monday ordered the liquidation of China Evergrande Group, a move likely to send ripples through China's crumbling financial markets as policymakers scramble to contain the deepening crisis.

MARKET REACTION:

Trading in shares of China Evergrande, China Evergrande New Energy Vehicle Group, and Evergrande Property Services were halted. The benchmark Hang Seng Index was up 1.2%.

COMMENTARY:

KEN CHEUNG, CHIEF ASIAN FX STRATEGIST, MIZUHO, HONG KONG

"The markets are still focused on the property sector downturn in China, so I think they will evaluate if this liquidation or the events (will) pose any impact on the progress to fix the property sector in China, and how the Chinese government will make any arrangement due to this kind of court case impact."

KENNY NG, SECURITIES STRATEGIST, CHINA EVERBRIGHT SECURITIES INTERNATIONAL

"This may further impact the confidence of mainland creditors and increase the difficulty of Evergrande's restructuring in mainland China. At the same time, this may also affect investors' confidence in the mainland real estate industry and the willingness of mainland residents to purchase properties. This has the potential to have a dampening effect on the economy and the capital market."

"Whether offshore creditors can apply for the sale of Evergrande's assets in mainland China will depend on whether the mainland courts recognise or enforce the winding-up order from Hong Kong. If recognised or enforced, offshore creditors have a chance to claim for the assets in the mainland. Otherwise, they can only apply for the liquidation of assets in Hong Kong."

BACKGROUND * Evergrande defaulted on offshore debt in late 2021, becoming a symbol of the debt crisis that has engulfed China's property sector. * The world's most indebted developer has around $300 billion of liabilities and $240 billion of assets. * The liquidation petition was first filed in June 2022 by Top Shine, an investor in Evergrande unit Fangchebao which said the developer had failed to honour an agreement to repurchase shares it had bought in the subsidiary. * Evergrande had been working on a $23 billion debt revamp plan for two years. * Its original plan was scuppered in late September when it said its billionaire founder Hui Ka Yan was under investigation for suspected crimes. * An ad hoc bondholder group had been siding with the developer in opposing the liquidation petition until the last hearing in early December.

(Reporting by Reuters Asia bureaus, compiled and edited by Subhranshu Sahu)