China stocks extend losses on weak yuan; trade talks report caps fall

* Shares recoup some losses on Sino-U.S. trade talks report

* SSEC -0.9 pct, CSI300 -0.6 pct, HSI -0.6 pct

* HK->Shanghai Connect daily quota used 2.3 pct

* Shanghai->HK daily quota used -2.9 pct

SHANGHAI, Aug 16 (Reuters) - China stocks hit a near two-and-half-year low in early trading on Thursday as the yuan's descent dampened investor confidence, but news of Sino-U.S. trade talks later this month helped recoup some of the losses.

** China said on Thursday a delegation would attend the next round of trade talks with U.S. counterparts in Washington later this month, in the latest bid to defuse a conflict that has set world markets on edge.

** The CSI300 index fell 0.6 percent, to 3,272.29 at the end of the morning session, while the Shanghai Composite Index hit its lowest level since March 2016 before ending 0.9 percent lower at 2,699.60.

** China's yuan weakened to a 15-month low against the dollar on Wednesday and flirted with a key support level not seen since 2008 as the dollar extended gains and a raft of data pointed to further slowing in China's economy.

** "The normal rise and fall in yuan will have limited impact on the stock market, though investor sentiment could be hard hit when key psychological levels are breached, such as the 6.9 per dollar," said Yan Kaiwen, analyst with China Fortune Securities.

** The declines also follow downbeat economic data reported on Tuesday, which comes as a trade war with the United States threatens to pile more pressure on the world's second-largest economy.

** In Hong Kong, the Hang Seng index dropped 0.6 percent, to 27,155.66, while the Hong Kong China Enterprises Index lost 0.6 percent, to 10,476.85.

** Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.31 percent while Japan's Nikkei index was down 0.20 percent.

** The yuan was quoted at 6.8927 per U.S. dollar, 0.6 percent firmer than the previous close of 6.934.

** The largest percentage gainers in the main Shanghai Composite index were CIG ShangHai Co Ltd up 9.99 percent, followed by Nanjing Textiles Import & Export Corp Ltd gaining 9.97 percent and Silvery Dragon Prestressed Materials Co Ltd Tianjin up by 9.97 percent.

** The largest percentage losses in the Shanghai index were Shangying Global Co Ltd down 10 percent, followed by HNA Infrastructure Investment Group Co Ltd losing 9.95 percent and Shandong Iron and Steel Co Ltd down by 8.91 percent.

** The top gainers among H-shares were ZhongAn Online P & C Insurance Co Ltd up 3.35 percent, followed by China Galaxy Securities Co Ltd gaining 1.57 percent and China Mobile Ltd up by 1.4 percent.

** The three biggest H-shares percentage decliners were China Gas Holdings Ltd which has fallen 4.60 percent, Tencent Holdings Ltd which has lost 2.9 percent and CNOOC Ltd down by 2.1 percent.

** About 7.24 billion shares have traded so far on the Shanghai exchange, roughly 52.3 percent of the market's 30-day moving average of 13.83 billion shares a day. The volume traded was 11.62 billion as of the last full trading day.

** As of 04:05 GMT, China's A-shares were trading at a premium of 16.66 percent over the Hong Kong-listed H-shares.

** The Shanghai stock index is below its 50-day moving average and below its 200-day moving average.

** The price-to-earnings ratio of the Shanghai index was 11.86 as of the last full trading day while the dividend yield was 2.7 percent.

(Reporting by Luoyan Liu and John Ruwitch; Editing by Gopakumar Warrier)