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China shares drop again on liquidity concerns, Hong Kong weak

Yimou Lee
Thursday, 19 Dec 2013 | 11:39 PM ET

* HSI -0.5 pct, H-shares -1.3 pct, CSI300 -0.7 pct

* Chinese financials fall as money rates hike

* Hong Kong shares drop on profit-taking

* China Everbright Bank off 3.5 pct in Hong Kong debut

Dec 20 (Reuters) - China shares fell again, as the country's money rates spiked for a third day and worries about tight liquidity remained in spite of the central bank's injection of cash.

If mainland indexes are down at the end of Friday, that will make a ninth straight day of falls.

Hong Kong shares were weak on Friday too, with investors taking profits on recent outperformers after the U.S. Federal Reserve said it would start to trim its stimulus.

China's benchmark seven-day bond repurchase rate hit 7.48 percent on Friday, its highest level since June 24. The hike sparked renewed concerns on tight liquidity before the resumption of new share offerings next month.

By midday, the Hang Seng Index was down 0.5 percent at 22,785.89 points, while the China Enterprises Index of the top Chinese listings in Hong Kong fell 1.3 percent.

For the week, those indexes were down 2 and 3.5 percent, respectively. The H-share index was headed for its fourth-straight weekly loss.

The CSI300 fell 0.7 percent, while the Shanghai Composite Index was down 0.6 percent at 2,115.10 points. Losses in Shanghai came in turnover some 10 percent below its 20-day moving average by midday.

On the week, the mainland indexes slid 3.8 and 3.7 percent, respectively, their biggest weekly loss since the period ended June 28.

"The market is melting - we saw significant profit-taking in some strong sectors. Lot of funds are almost done for the year and are taking profits off the table right after the Fed announced the tapering," said Jackson Wong, Tanrich Securities' vice-president for equity sales in Hong Kong.

Wong said liquidity concerns continued to hurt Shanghai shares. If the market drops more, "there might be some voices to ask for help from the Chinese central bank to roll out some policies to stabilize the A-shares market," he said.

Chinese financials led losses among industry groups. In Hong Kong, Ping An Insurance shed 4 percent, while China Life down 2.9 percent. Both fell to their one-month lows.

Ping An Bank dropped 2.7 percent to its lowest in almost two months in Shenzhen, while Hua Xia Bank fell 2.2 percent in Shanghai.

GOLD SHARES, CASINOS DOWN

Chinese gold miners fell as gold prices fell sharply after the Fed's move to trim its bond-buying stimulus.

Zijin Mining fell 1.7 percent in Shanghai and 4.1 percent to a four-month low in Hong Kong, while Shandong Gold and Zhongjin Gold both dropped more than 3 percent in Shanghai.

Macau gambling stocks extended losses as investors took some profit after strong gains in the past two weeks. Galaxy Entertainment, which hit a record high on Tuesday, fell 3.1 percent. Macau Legend tumbled 9.1 percent on Friday and was down 12.9 percent for the week.

Shares in China Everbright Bank fell 3.5 percent in its Hong Kong trading debut on Friday, after the mid-sized lender raised $3 billion in a share offering.