HONG KONG, July 7 (Reuters) - Hong Kong has suspended a rule that banned individual flights for bringing in passengers infected with the COVID-19 virus, as it caused "unnecessary trouble" and inconvenience to residents of the global financial hub, the government said on Thursday.

Airlines welcomed the move that paves the way for the return of scores stranded overseas by the bans, which exceeded 100 this year and greatly frustrated people accustomed to easy and efficient travel links with the former British colony.

"The social cost caused by the 'circuit breaker mechanism' is quite large, and it also brings unnecessary trouble to ... international students and their families," the government said in a statement.

All arrivals must still spend at least a week in hotel quarantine and comply with frequent testing orders, providing stool samples for babies and filling out multiple forms.

The government aims to improve quarantine arrangements, so as to ease the movement of people "necessary for social and economic recovery," it added.

Airlines earlier faced a ban of five days if their flights brought in more than five infected people. That was down from as much as two weeks before, making operations tougher as the city's borders were effectively shut for more than two years.

The bans brought hundreds of flight cancellations, leading to family separations as people struggled to rebook trips and quarantine hotels at their own expense.

Hong Kong's competitiveness had been hammered by the pandemic measures, said business executives who hope the city's new leader, John Lee, will scrap the quarantine rules.

Lee, sworn in last week, needs to "reboot" the city, such executives have said, as Hong Kong's border has effectively been sealed since 2020 and international arrivals face tough quarantine and testing protocols.

Shares of Hong Kong carrier Cathay Pacific rose more than 5% after the news. The airline has been battered by the strict quarantine rules, bringing a fall of 98% in passenger numbers.

Cathay said it welcomed the move and was committed to keeping up the flow of people and goods between Hong Kong and the rest of the world, and upholding its status as an international aviation hub.

Many airlines have suspended or slashed flights with the Chinese-ruled city, making it difficult to find flights.

Korean Air said that while the move was positive, it was not considering adding flights.

"We've already started to operate a daily flight to Hong Kong since July," it said, explaining the reasons. "The Hong Kong government still requires the seven-day quarantine for all international travellers."