Hong Kong, China shares drop after services PMI; H-shares at 7-week low
* HSI -1.8 pct, below 23,000 support; H-shares -2.4 pct at 7-week low, CSI300 -1.5 pct
* Chinese financial and cyclical sectors fall after services PMI
* Petro China drops to six-month low
* Baotou Steel Rare-Earth rises after acquiring nine mining companies
HONG KONG, Jan 3 (Reuters) - Hong Kong and Shanghai shares broke below key technical support levels on Friday, dragging down by Chinese financial and energy sectors, after another government survey showed signs the world's second-largest economy was losing momentum.
Analysts said weakness in global markets, sparked by a bout of risk aversion, further dampened sentiment as investors remained concerned about slower economic growth in China.
Growth in China's services sector fell to a four-month low in December as business expectations dropped, a survey showed, adding to evidence that China's economy lost steam into the close of 2013.
By midday, the Hang Seng Index was down 1.8 percent at a seven-day low of 22,930.05 points, below support at 23,000.
The China Enterprises Index of the top Chinese listings in Hong Kong fell 2.4 percent to its lowest since mid-November.
On the week, they are now down 1.3 and 2.6 percent, respectively.
In mainland China markets, the CSI300 dropped 1.5 percent, while the Shanghai Composite Index was down 1.4 percent and fell below the 2,100 support level to 2,080.59 points. They have fallen 0.7 and 1 percent so far this week.
"Both service and manufacturing PMI are indicating that China's economy is not doing particularly well and still lacking any direction," said Jackson Wong, Tanrich Securities' vice-president for equity sales in Hong Kong.
"A lot of investors are overly worried about China's economy health and debt problems," Wong said, adding that most investors would wait on the sidelines and the Hong Kong market may test the 27,500 support level in the short-term.
Leading losses were Chinese financial and cyclical stocks. Ping An Insurance was down 2.4 pct in Shanghai while China Life declined 2.7 percent.
In Hong Kong, Petro China dropped 2.8 percent to levels not seen since August, while China Shenhua Energy tumbled another 4.4 percent after falling 2.3 percent a day earlier.
Property counters were also down, with Green Town China falling 4.1 percent and China Overseas Land dropping 2.7 percent. Both fell to their lowest in about six months.
Chinese rare earth producers rose after the Economic Information Daily reported on Friday that China's State Council has approved a plan to set up "large rare earth groups."
Shares in Inner Mongolia Baotou Steel Rare-Earth Hi-Tech jumped 3.1 percent after the country's biggest producer of rare earths said it has acquired nine regional mining companies as part of the government masterplan to consolidate the sector.
Embattled China Rongsheng Heavy Industries Group Holdings Ltd surged 6.5 percent to its highest in 7 months, after Hong Kong's Apple Daily reported on Friday a controlling share holder of Shunfeng Photovoltaic International Limited was behind the HK$1 billion convertible bonds the shipbuilder issued in late December.