Hong Kong snaps 5-day gaining streak, weak China outlook weighs

* HSI down 0.9 percent, H-share index off 1.3 percent

* Weak China markets weigh, CSI300 falls 1 percent afterholiday

* Focus on profits, not policy in China: JPM's Mowat * Tencent, AIA pull back from record highs

* ZTE shares slip 6 percent in HK after draft U.S. Congressreport

(updates to close) By Vikram Subhedar

HONG KONG, Oct 8 (Reuters) - Hong Kong shares snapped afive-session streak of gains on Monday as Chinese markets turneddown after a week-long holiday on concerns growth in the world'ssecond-largest economy could slow further.

The Hang Seng Index fell 0.9 percent to 20,824.6points while the index of top locally listed Chinese shares

fell 1.3 percent and was the weakest among regionalbenchmarks in Asia.

On the mainland, the CSI300 of top Shanghai andShenzhen listings fell 1 percent while the Shanghai Composite

was down 0.6 percent as domestic investors returned tothe market after the Mid-Autumn Festival and National Dayholidays.

PetroChina , down 0.7 percent, and coal producerChina Shenhua , off 1.6 percent were the top loserson the CSI300 followed by major producers of premium liquor suchas Kweichow Moutai , down 2.4 percent, partly onworries about weak sales over the Golden Week holiday.

Chinese shares in Hong Kong led losses with China Mobile

down 1.4 percent while Tencent Holdingsdropped 1.3 percent, pulling further away from a record high hitlast week.

Hong Kong shares rose for five straight sessions beforeMonday's fall on hopes that China would take steps to liftgrowth and boost the market heading up to the once-in-a-decadeleadership transition expected to get under way next month.

"I think investors are barking up the wrong tree here," saidAdrian Mowat, JPMorgan's chief emerging markets strategist whomaintains an "underweight" rating on China stocks.

"Our mantra on China is focus on profits not policy," saidMowat, adding that excess capacity is still a problem in Chinathat continues to weigh on profit margins.

Also pressuring domestic markets in China was a report inthe Shanghai Securities journal which said that regulators wouldresume initial public offering approvals after a two-month halt,a move that could pressure liquidity in the A-share markets.


While the pace of cuts in earnings forecasts has slowedanalysts are still trimming estimates for Chinese profits.

Over the past month, analysts have cut expectations forforward 12-month earnings for MSCI China constituents by 0.3percent, according to Thomson Reuters I/B/E/S.

Earnings season in the United States gets under way onTuesday with aluminum producer Alcoa expected to show itbroke even in the third quarter although investors will likelyfocus more on comments about global demand.

The World Bank cut its growth forecasts for the East Asiaand Pacific region on Monday and said there was a risk theslowdown in China could get worse and last longer than expected.

Worries over growth spurred profit-taking in cyclicalsectors such as energy and mining shares while defensives suchas utilities outperformed.

Hong Kong & China Gas rose 0.8 percent whileconglomerate Hutchison Whampoa rose 1.1 percent.Insurer AIA Group eased 0.8 percent.

The materials sector in Hong Kong , which rosenearly 10 percent in September, fell 1.6 percent and was the toploser followed by telecom-related shares which dropped1.4 percent.

ZTE Corp fell 6 percent, the biggest loser on theChina Enterprises Index, after a draft report by the U.S.Congress said China's top telecommunications gear makers shouldbe shut out of the U.S. market because they pose a securitythreat.

(Editing by Jacqueline Wong)

((vikram.subhedar@thomsonreuters.com)(+852 28436975))