HK, Shanghai shares fall on interest rate concerns

* China, HK shares fall on concern over higher interest rates

* Wynn Macau slumps on downbeat outlook of parent

* Air China advances after returning to profit
(Updates to midday)

By Jun Ebias and Claire Zhang

HONG KONG/SHANGHAI, Oct 28 (Reuters) - Shares in Hong Kong
and China fell on Wednesday, as property counters eased on
concern about a possible shift toward a tighter monetary policy
by Beijing as the economic recovery gains momentum.

The benchmark Hang Seng Index fell 1.66 percent or 368.64
points to 21,800.95 on Wednesday morning. Turnover was HK$40.00
billion ($5.2 billion), versus midday Tuesday's HK$42.84 billion.

"The Hong Kong stock market is running out of steam and
that's encouraging investors to take profit," said Andy Lam, a
strategist at Harris Fraser (International). "From last week, we
do see the market getting a bit overbought."

Hong Kong stocks rallied to their highest in 14 months on
Friday.

Wynn Macau (1128.HK) tumbled 8.26 percent after its parent,
Wynn Resorts (WYNN.O), gave a downbeat outlook, causing its share
to drop 10 percent in the United States. [ID:nN23120887]

Aluminum Corp of China (2600.HK) was down 2.55 percent. The
aluminium maker returned to profit in July-September after three
quarterly losses, but its net profit of 21.27 million yuan ($3.11
million) in the third quarter was down 88 percent from a restated
profit a year earlier. [ID:nHKG177802]

China Shipping Container Lines (2866.HK) fell 2.97 percent.
The company posted a 1.94 billion yuan ($284.1 million) loss for
the third quarter ended September.

ZTE Corp (0763.HK) slumped 3.85 percent. China's No.2
telecommunications equipment maker posted a 58.2 percent rise in
profit, beating a consensus forecast, as domestic providers build
new 3G networks. [ID:nPEK245247]

The China Enterprise Index .HSCE of top locally listed
mainland Chinese stocks was down 2.04 percent at 12,876.84.

Bucking the downward trend, mainland airlines gained after
posting profits in the third quarter.

Air China (0753.HK) rose 1.16 percent, after the mainland
carrier's earnings returned to the black in the third quarter,
with a boost from fuel-hedging gains and a strong rebound in
domestic air travel. [ID:nSHA270125]

China Southern Air (1055.HK) advanced 1.67 percent.

Ping An Insurance (2318.HK) declined 2.45 percent. The
mainland insurer returned to a quarterly profit in July-September
but warned that low interest rates and stock volatility could
weigh on profit in the final quarter. [ID:nPEK271534]

Hong Kong developers extended their declines on concerns the
government may impose more measures to curb a faster climb in
property prices.

New World Development (0017.HK) fell 4.45 percent and Sino
Land (0083.HK) was 4.12 percent lower.

The Hong Kong Monetary Authority on Friday said it would
implement measures to slow a surge in luxury property prices,
including capping mortgage loan values. [ID:nHKG305705]

China Shenhua Energy (1088.HK) shed 2.06 percent, even after
reporting a 12 percent rise in profit. [ID:nHKG254113] In
Shanghai, China Shenhua (601088.SS), the world's most valuable
coal producer, slipped 0.52 percent to 34.61 yuan.

SHANGHAI SLIPS

The Shanghai Composite Index .SSEC ended Wednesday morning
at 2,988.952 points, after posting its biggest one-day loss in
five weeks on Tuesday.

Losing Shanghai A shares outnumbered gainers by 636 to 239,
while turnover shrank to 60 billion yuan ($8.8 billion) from
Tuesday morning's 70 billion yuan.

The market is also eyeing the pending start of trade this
Friday on ChiNext, a Nasdaq-style second board for start-ups,
where an initial 28 companies are to debut in the first batch.

"The index may fluctuate around the key 3,000-point level in
the short term, with some money maybe looking at Friday's listing
of start-up shares, but economic recovery is on track and this
may offer support," said Chen Jinren, senior analyst at Huatai
Securities in Jiangsu.

The official China Securities Journal cited the Beijing-based
Unirule Institute of Economics as saying that China's economy
would grow by 8.2 percent in 2009, while the CPI would fall 0.1
percent for the same period.

But the improving economic outlook has also left investors
wary about a gradual exit from the government's loose monetary
policy.

Property sector heavyweight China Vanke (000002.SZ) was down
2.34 percent at 11.70 yuan, while Wuhan Steel (600005.SS) lost
2.82 percent to 7.24 yuan.
(Editing by Chris Lewis)