HK, China shares fall, weak Minsheng debut weighs

* China Minsheng down 1 percent on debut

* Banks extend losses on Minsheng's performance
(Updates to midday)

By Sui-Lee Wee and Claire Zhang

HONG KONG/SHANGHAI, Nov 26 (Reuters) - Stocks in Hong Kong
and China were down more than 1 percent by midday Thursday, as
China Minsheng Banking made a disappointing market debut,
weighing on recently battered banking stocks.

Minsheng Banking Corp (1988.HK), which raised $3.9 billion in
the world's fifth-largest initial public offering of 2009, fell 1
percent in its Hong Kong trading debut, underscoring recently
soured investor sentiment toward mainland banks. [ID:nHKG251850]

By midday, the stock was at HK$8.97, compared with the IPO
price of HK$9.08.

"Chinese banks are suffering a blowout," said Francis Lun,
general manager at Fulbright Securities. "It's a little overdone;
they've taken a beating recently, but I think they will fall
further."

The benchmark Hang Seng Index .HSI was down 1.07 percent,
or 242.19 points, at 22,369.61 at midday. Turnover was HK$40.3
billion ($5.20 billion), lower than midday Wednesday's HK$42.2
billion.

Chinese banking stocks have come under pressure over concerns
of potential cash calls by the sector on expectations the
government may lift capital adequacy ratios or reserve
requirements for larger state lenders next year after a lending
boom.

By midday, Bank of China (3988.HK) was down 1.79 percent at
HK$4.40, extending a 6.9 percent loss in the past two sessions,
while China Construction Bank (CCB) (0939.HK) was down 2.8
percent at HK$6.95, after falling 3.4 percent in the previous two
sessions.

Industrial & Commercial Bank of China (ICBC) (1398.HK) was
down 2.5 percent at HK$6.63.

Bank of East Asia (BEA) (0023.HK) bucked the overall
weakness, up 3.57 percent to HK$34.85 after Citigroup raised its
price target for Hong Kong's No.5 bank to HK$44 from HK$28 and
upgraded its recommendation to "buy" from "sell".

China Resources Gas (1193.HK) surged as much as 16 percent to
its highest level in 18 months after the gas fuel distributor
said its subsidiary would buy Zhengzhou Gas Co (3928.HK) in a
deal valued at HK$682.7 million ($88.1 million). By midday, the
stock was at HK$8.22, up 9.6 percent.

Orange plantation owner Asian Citrus Holdings (0073.HK),
which listed in Hong Kong on Thursday, suspended trade in the
afternoon. Traders said this was a result of the huge surge at
the open to HK$51.25. Before the suspension, the stock traded at
HK$19.94.

SHANGHAI FALLS

China's key stock index slipped 1.02 percent in heavy trade,
with bank shares weak on concerns about shrinking lending and a
possible need to raise funds next year to shore up capital.
Minsheng Banking Corp (600016.SS) sagged after a dull Hong Kong
debut.

The Shanghai Composite Index .SSEC ended the morning at
3,256.609 points, after rebounding 2.07 percent on Wednesday.

"The banking sector is under pressure from possible
fundraising, while lending by big banks is expected to shrink
sharply at the end of this year," said Wen Lijun, analyst at
Nanjing Securities.

She said investors were also wary that a central economic
meeting due later this month or early next month may discuss
asset price bubbles, which would weigh down the stock and
property markets. She forecast the index to drift lower in the
near term.

Losing Shanghai A shares outnumbered gainers by 666 to 214
while turnover picked up to 131 billion yuan ($19 billion) from
Wednesday morning's 113 billion yuan.

ICBC (601398.SS) lost 1.13 percent to 5.27 yuan, drawing
little support from a report in the official Shanghai Securities
News, which cited a bank official as saying it had no plans to
raise capital in the near term. [ID:nSHA351167]

Minsheng Banking Corp sank 3.59 percent to 8.06 yuan after
its weak debut on the Hong Kong market,

Shanghai Pudong Development Bank (600000.SS) sagged 2.59
percent to 22.58 yuan after the official Securities Times quoted
Citi China's top executive as saying Citigroup (C.N) had no plan
to increase its stake in Pudong Bank in the near future.

The Shanghai dollar-denominated B-share index .SSEB dropped
1.63 percent to 250.260 points after jumping 5.12 percent on
Wednesday, continuing the volatile swings of recent weeks after
rallying on speculation that the index may be merged with a
planned international board for foreign companies' shares.

The steel sector was hit by profit-taking, with steel
industry leader Baoshan Iron and Steel (600019.SS) sinking 4.03
percent to 8.57 yuan after climbing 8.51 percent on Wednesday.

Metals shares were higher on rising commodity prices, with
Yunnan Chihong Zinc & Germanium (600497.SS) jumping 6.02 percent
to 33.29 yuan after the official Shanghai Securities News
reported that it planned to raise 1.8 billion yuan ($264 million)
through a rights share issue to fund a lead/zinc project.

Henan Lianhua Gourmet Powder (600186.SS), a monosodium
glutamate producer, tumbled 6.9 percent to 6.61 yuan after saying
raw materials costs had been rising faster than its product
prices. The shares have soared 71 percent so far this month as
product prices jumped 25 percent in the first 10 months of the
year.
(Editing by Chris Lewis)
((suilee.wee@thomsonreuters.com; +852 2843 6314; Reuters
Messaging: suilee.wee.reuters.com@reuters.net))
((If you have a query or comment on this story, send an email to
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