* SSEC -0.5 pct, CSI300 -0.4 pct, HSI -0.8 pct
* Resources plays slide for 2nd day as commodity prices slump
* Market confidence hit by 'slew of bad news' - fund manager
SHANGHAI, Sept 22 (Reuters) - Hong Kong stocks were on track for their worst day in a month and China shares hit three-week lows early Friday, as investors reacted to S&P's downgrade of China's sovereign credit rating and North Korea's threat of another nuclear test.
Also, the U.S. Federal Reserve's plan to shrink its balance sheet and later raise interest rates continued to dent sentiment.
Hong Kong's Hang Seng index dropped 0.8 percent, to 27,874.64 points by the lunch break, while the Hong Kong China Enterprises Index lost 0.9 percent, to 11,100.63. However, both indexes are still poised to post gains for the week.
In China, the blue-chip CSI300 index fell 0.4 percent, to 3,821.33 points while the Shanghai Composite Index lost 0.5 percent, to 3,341.72 points.
Investors dumped resource shares for the second day on fears a stronger dollar could hit commodity prices.
An index tracking the sector in China fell nearly 1 percent, as Shanghai metal futures tumbled. In Hong Kong, commodity plays dropped more than 2 percent.
"Investor confidence is battered by a slew of bad news, at least in the short term," said Fan Wenjie, head of the overseas investment department of Shanghai Kaiyuan Group, a conglomerate.
"And the Fed tightening plan may be prodding some investors to adjust their portfolio and buy more dollar assets."
Confidence is further weakened by S&P's one-notch China downgrade to A+ from AA-, with the rating agency saying "a prolonged period of strong credit growth has increased China's economic and financial risks."
The S&P China downgrade, which triggered one today for Hong Kong, mainly is a psychological setback, as Chinese firms don't borrow much from overseas.
Sentiment was also dampened by heightened tension on North Korea. Its foreign minister, Ri Yong Ho, said on Friday he believes the North could consider a nuclear test on an "unprecedented scale" in the Pacific Ocean, South Korea's Yonhap news agency reported.
The comments were made after news that China's central bank has told banks to strictly implement United Nations sanctions against North Korea, while U.S. President Donald Trump ordered new sanctions on North Korea.
In both the mainland and Hong Kong, stocks fell across the board.
(Reporting by Samuel Shen and John Ruwitch; Editing by Richard Borsuk)