* HSI -1.1 pct, H-shares -0.9 pct, CSI300 +0.1 pct
* China banks hit by new liquidity regulations
* Sinopec lifted by plan for private investment in marketing arm
* Tencent sinks after Facebook's WhatsApp deal
* MGM China spikes on robust 2013 earnings, special dividend
HONG KONG, Feb 20 (Reuters) - Hong Kong shares fell from a four-week high early on Thursday, and losses accelerated after a preliminary private survey showed manufacturing activity in China slowed to a seven-month low, stoking fears of a more severe slowdown.
The China flash Markit/HSBC Purchasing Managers' Index (PMI) declined to 48.3 in February from January's final reading of 49.5. The employment sub-index slid to its weakest in four years.
At midday, the Hang Seng Index was down 1.1 percent at 22,412.8 points after closing on Wednesday at its highest since Jan. 23. The China Enterprises Index of the leading offshore Chinese listings slid 0.9 percent.
The CSI300 of the largest Shanghai and Shenzhen A-share listings inched up 0.1 percent, while the Shanghai Composite Index was up 0.7 percent after rising by as much as 1.7 percent before the survey's release.
"The survey today is a further sign of a slowdown in the Chinese economy after last month's set of PMIs, but the market reaction is not that bad," said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities.
"The upcoming annual parliamentary meetings in early March will take on bigger importance now," Yip added. "You have to expect Beijing to act if the economy slows down more from here, because they cannot proceed with their reform agenda without maintaining a certain level of growth."
Chinese banking plays were among the leading drags on benchmark indexes. Industrial and Commercial Bank of China slid nearly 3 percent in Hong Kong and 0.6 percent in Shanghai.
The sector was also hit by a directive from the banking regulator late on Wednesday reiterated that banks must raise their liquidity coverage ratio, a barometer gauging their short-term resilience to high-stress situations, to 100 percent by 2018 under new rules effective March 1.
Bank of Beijing was an exception to Thursday's trend, rising another 2.8 percent after saying it would collaborate with Xiaomi.com in mobile payment and credit. It soared 10 percent on Wednesday on initial reports of this arrangement, and a formal announcement was made after market close.
Tencent Holdings sank 2.3 percent on fears of greater competition after Facebook Inc announced its purchase of mobile-messaging startup WhatsApp for $19 billion in cash and stock.
The Chinese internet giant has also been on an acquisition spree, having announced late on Wednesday the purchase of 20 percent in Dianping, China's largest restaurant review and business listing site.
There were also gains for China Petroleum and Chemical Corp (Sinopec) , whose shares surged by the maximum 10 percent in Shanghai and 9.6 percent in Hong Kong. Investors cheered a plan to seek private investment for its marketing arm.
"We believe management is exploring the possibility of spinning off the division in an IPO or sale of a stake, with an eye to unlock the value of the division which is not fairly reflected in the share price of Sinopec," Citi analysts said in a client note dated Feb. 19.
Other petrochemical counters were also buoyed by Sinopec gains. Petrochina jumped more than 2 percent in Hong Kong and 4.9 percent in Shanghai.
MGM China spiked 4.5 percent after the Macau casino operator announced a 17.7 percent rise in full-year 2013 net profit and declared a special dividend of HK$1.02 ($0.13) per share.