SHANGHAI, Dec 27 (Reuters) - China stocks rose on Tuesday, as the country took a major step to reopen its economy to the rest of the world, while a faster-than-expected virus infection peak also fuelled expectations of a quicker economic recovery.

** China's blue-chip CSI 300 Index was up 1.1% by the end of the morning session, while the Shanghai Composite Index added 0.8%.

** Hong Kong markets were closed on Tuesday for Christmas.

** China will stop requiring inbound travellers to go into quarantine starting from Jan. 8, the National Health Commission said on Monday. It will also downgrade the seriousness of COVID-19 as it has become less virulent and will gradually evolve into a common respiratory infection.

** "It marks another major step in China's reopening, especially to the rest of the world, despite recent spike in local infection cases," J.P.Morgan analysts wrote in a note.

** They expected a shorter transitional pain in 1Q23, followed by above-trend sustained recovery from 2Q23 onwards.

** Shares in consumer staples, banks and transportation jumped more than 2% each to lead the gains.

** Meanwhile, tourism-related companies slipped 0.1% and some drugmakers tumbled as a few investors booked profits following the news.

** Air China lost 1.7%, Yunnan Tourism declined 2.7% and Shijiazhuang Yiling Pharmaceutical slumped 8.5%.

** Huaan Securities said the spread of the virus was faster than expected. "The infection will gradually peak before the Spring Festival, based on local health commissions' estimates and the Baidu search index," they wrote in a note.

** "Therefore, the pace of consumption recovery will come earlier, and it will provide a better environment for the implementation of support policies."

** Huaan analysts added traffic volume and consumption data during the Chinese New Year holidays will be important indicators to measure the recovery of consumption in the first quarter of 2023. (Reporting by Shanghai Newsroom; Editing by Krishna Chandra Eluri)