China shares at 3-wk low; HK down despite Sinopharm

* HSI range-bound, off 13-month high hit last week

* Sinopharm up 15.8 pct, but market starts discounting rally

* U.S. Fed expected to keep policy rate steady (Updates to close)

By Claire Zhang and Nerilyn Tenorio

SHANGHAI/HONG KONG, Sept 23 (Reuters) - Chinese shares closed lower on Wednesday as the mainland markets remained weighed down by worries over excessive IPO share supply while Hong Kong began to discount the listing debut gains made by Sinopharm (1099.HK).

The markets, which also started factoring in expectations of stable monetary policies by both the United States and China, will be in search of new catalysts for their next trading move.

"People (on Wall Street) are still cautious, and here we would just follow that trading stance. We won't be seeing very aggressive trading moves," said Alex Wong, director at Ample Finance Group in Hong Kong.

In Shanghai, traders have started taking profit ahead of the week-long Chinese national holiday from Oct 1.

China's top pharmaceutical firm Sinopharm debuted in a consolidating Hong Kong market with a 15.8 percent closing gain, which analysts said was relatively modest compared with China's other recent new listings.

Hong Kong's benchmark Hang Seng Index .HSI settled 0.49 percent lower at 21,595.52 points, slipping off the 13-month closing high at the 21,700-level hit last week.

Turnover was HK$58.5 billion ($7.5 billion), up from Tuesday's HK$50 billion.

The China Enterprises Index .HSCE of top locally listed mainland Chinese stocks was down 0.6 percent at 12,431.81.

Banks and financials were down 1.1 percent, with index heavyweight HSBC (0005.HK) down 1 percent at HK$90.80, China's leading lender ICBC (1398.HK) down 0.82 percent at HK$6.06, and Bank of China (3988.HK) down 1.15 percent at HK$4.28.

Sinopharm Group Co Ltd, which raised $1.13 billion in its IPO, jumped to as high as HK$19.74, or 23.4 percent above its HK$16 issue price, before closing up 15.8 percent at HK$18.52.

Geely Automobile Holdings (0175.HK), China's largest privately-owned carmaker, was up nearly 19 percent at HK$2.13, easing back from a 25.7 percent initial gain after the lifting of trading suspension. The carmaker said earlier that it planned to issue HK$2.59 billion ($334 million) in convertible bonds and warrants to an affiliate of Goldman Sachs (GS.N) [ID:nHKG310894].

SHANGHAI AT 3-WEEK LOW

China's key stock index fell 1.9 percent in shrinking turnover on Wednesday to a three-week closing low, breaking below a key chart support level as worries of more share supplies weighed on sentiment.

The Shanghai Composite Index .SSEC closed at 2,842.721 points, after slipping through support at the 125-day moving average at 2,849 points in afternoon trade.

As mainland investors grew preoccupied with the imminent launch of a new board for start-up firms and concerns mounted about rising share supplies, the average premium of Shanghai A shares over Hong Kong-listed H shares of the same companies .HSCAHPI slipped below 11 percent to its lowest in one year.

Losing Shanghai A shares outnumbered gainers 776 to 108, while turnover dropped to a two-week low of 117 billion yuan ($17.14 billion) from 138 billion yuan on Tuesday.

China International Capital Corp said in a recent report that it retained a cautious stance towards the index's outlook for this week and October as investors may lock in profits before the one-week National Day holiday begins on Oct. 1.

It expected new share issuance from IPOs and corporate fund-raising to weigh on the market in October, although the launch of new mutual funds and a steady economic recovery could limit a fall in share prices.

State media reported that the first 10 companies to be listed on the new board for start-ups would be priced at relatively high levels, reflecting strong investor interest, while the country's mutual funds would also be allowed to invest in the start-ups.

"More investors are locking in profits ahead of the holiday and start up-board shares are drawing a lot of attention even at high prices," said Chen Huiqin, senior analyst at Huatai Securities in Nanjing.

Chen added that the index may remain sluggish in the short term as more shares come to the market but that some shares listed on the main board were a better deal for investors than the risky high valuations on the second board.

"Chinese investors are interested in going after new things like start-up shares," said Guo Yanlin, head of Shanghai Securities' research unit.

Steel shares were soft, with Tangshan Iron and Steel 000709.SZ sinking 3.91 percent to 6.63 yuan after industry consultancy Umetal said its parent Hebei Iron and Steel Group, the world's fourth-biggest steelmaker, cut key product prices as excess supply weighs on the market. [ID:nSHA315407]

Several high-tech and new energy shares outperformed on Wednesday, after Chinese President Hu Jintao on Tuesday promised to put a "notable" brake on the country's rapidly rising carbon emissions, although he dashed hopes that he would unveil a hard target to kickstart stalled climate talks. [ID:nN22195458]

FangDa Carbon New Material (600516.SS) rose 4.03 percent to 9.29 yuan, while SUFA Technology Industry 000777.SZ and Shenzhen Woer Heat-Shrinkable Material 002130.SZ both raced up by their 10 percent daily limits.

Sinolink Securities said Hu's latest speech in New York about climate change suggested that China's long-term target for new energy development may be raised and it maintained a buy recommendation on the renewable energy sector. (Editing by Jacqueline Wong)